Archive for July 2020

 
 

Amazon, Bitcoin, Tesla—who’s up next?

In the late 1990s, we were bombarded with stories that Amazon was a bubble. “Look at those foolish investors, buying into a company that never earns any profit.” Then attention switched to Bitcoin.
“Look at that foolish Ponzi scheme. Imagine people paying $30 a coin!”.

Then it switched to Tesla. “The smart money is on the short side—the $200 price is all hype, there are no profits”.

Who will the smart money focus on next as the perfect example of an asset price bubble? Please let me know when you find out.

🙂

David Shor’s views on politics

New York magazine interviewed David Shor, the Democratic campaign consultant who was recently cancelled by the left. Some of his comments caught my eye:

The basic political argument since the French Revolution has been the left saying, “Let’s make things more fair,” and the right saying, “If we do that, it will lead to chaos and threaten your family.” . . .

Other research has shown that messaging centered around the potential for cooperation and positive-sum change really appeals to educated people, while messaging that emphasizes zero-sum conflict resonates much more with non-college-educated people. Arguably, this is because college-educated professionals live really blessed lives filled with mutually beneficial exchange, while negative-sum conflicts play a very big part of working-class people’s lives, in ways that richer people are sheltered from. . . .

Black voters trended Republican in 2016. Hispanic voters also trended right in battleground states. In 2018, I think it’s absolutely clear that, relative to the rest of the country, nonwhite voters trended Republican. In Florida, Democratic senator Bill Nelson did 2 or 3 points better than Clinton among white voters but lost because he did considerably worse than her among Black and Hispanic voters. We’re seeing this in 2020 polling, too. I think there’s a lot of denial about this fact.

I don’t think there are obvious answers as to why this is happening. But non-college-educated white voters and non-college-educated nonwhite voters have a lot in common with each other culturally. So as the salience of cultural issues with strong education-based splits increases — whether it’s gender politics or authoritarianism or immigration — it would make sense that we’d see some convergence between non-college-educated voters across racial lines. . . .

There’s this sense in left-wing politics that rich people have disproportionate political influence and power. Well, we’ve never had an industrialized society where the richest and most powerful people were as liberal as they are now in the U.S. You know, controlling for education, very rich people still lean Republican. But we’re at a point now where, if you look at Stanford Law School, the ratio of students in the college Democrats to students in the college Republicans is something like 20-to-1. . . .

Why did Heidi Heitkamp vote to deregulate banks in 2018, when the median voter in North Dakota doesn’t want looser regulations on banks? But the thing is, while that median voter doesn’t want to deregulate banks, that voter doesn’t want a senator who is bad for business in North Dakota. And so if the North Dakota business community signals that it doesn’t like Heidi Heitkamp, that’s really bad for Heidi Heitkamp, because business has a lot of cultural power. . . .

So the other positive thing is that age polarization has also gone up. It’s not just that every new generation is more Democratic. Something much weirder has happened. People who were 18 years old in 2012 have swung about 12 points toward Democrats, while people who were 65 years old in that year have since swung like eight points toward Republicans. . . .

The Electoral College bias is now such that realistically we [Dems] have to win by 3.5 to 4 percent in order to win presidential elections.

I suspect he’s right about almost everything.

Andrew Sullivan had the following to say on leaving New York magazine:

And maybe it’s worth pointing out that “conservative” in my case means that I have passionately opposed Donald J. Trump and pioneered marriage equality, that I support legalized drugs, criminal-justice reform, more redistribution of wealth, aggressive action against climate change, police reform, a realist foreign policy, and laws to protect transgender people from discrimination. I was one of the first journalists in established media to come out. I was a major and early supporter of Barack Obama. I intend to vote for Biden in November.

It seems to me that if this conservatism is so foul that many of my peers are embarrassed to be working at the same magazine, then I have no idea what version of conservatism could ever be tolerated. And that’s fine. We have freedom of association in this country, and if the mainstream media want to cut ties with even moderate anti-Trump conservatives, because they won’t bend the knee to critical theory’s version of reality, that’s their prerogative.

The NYT and New York magazine seem determined to commit intellectual suicide. But have no fear; there will always be a place on the internet for good ideas:

If the mainstream media will not host a diversity of opinion, or puts the “moral clarity” of some self-appointed saints before the goal of objectivity in reporting, if it treats writers as mere avatars for their race and gender or gender identity, rather than as unique individuals whose identity is largely irrelevant, then the nonmainstream needs to pick up the slack.

Trump’s traits

One short Yahoo article pretty much summarizes Trump. Here are a few excerpts:

The [Republican] governor recalls Mr Trump talking about how much he respected Chinese President Ji Xinping, how much he enjoyed playing golf with Japan’s Prime Minister Shinzo Abe and how well he’d gotten along with Kim Jong-Un, the dictator of North Korea.

“Then, the jarring part: Trump said he really didn’t like dealing with President Moon from South Korea. The South Koreans were ‘terrible people,’ he said, and he didn’t know why the United States had been protecting them all these years,” Mr Hogan wrote. “‘They don’t pay us, Trump complained.'”

Mr Hogan recalled watching his wife’s reaction to the president insulting her home country.

“Yumi was sitting there as the president hurled insults at her birthplace. I could tell she was hurt and upset. . . .

Eventually, the couple secured 500,000 tests with the help of the South Korean government. Despite securing testing on their own – per Mr Trump’s instructions to the states – the president was less than congratulatory to the first couple of Maryland.

“The governor from Maryland didn’t really understand [about testing],” Mr Trump said. “The governor of Maryland could’ve called Mike Pence, could have saved a lot of money … I don’t think he needed to go to South Korea. I think he needed to get a little knowledge.”

I’ve got to give Trump credit. Even if I tried as hard as I could, I could not simultaneously be so evil, insulting, selfish, clueless and dishonest all in a few short sentences. He really packs it in!!

Update: Love this ad. Show’s how Trump surrounds himself with criminals, like a mafia boss.

Is China’s GDP growth 3.2% or 60%?

China just reported 3.2% GDP growth in Q2. That number sounds about right to me. But I can’t help noticing that if China reported its GDP growth rates the way the US government does, it would have reported roughly 60% growth in Q2. At least I think it would have; see if you can follow my argument and correct any errors:

China’s GDP data shows year-over-year growth. Thus Q2 GDP in China was 3.2% above 2019:Q2. But how much did it grow relative to last quarter?

In Q1, China’s GDP fell by 6.8% relative to 2019:Q1. But how much did it fall by compared to the previous quarter? My guess is that it probably fell by at least 11% from 2019:Q4, as prior to Covid-19, China’s GDP had been rising at a fairly steady rate of roughly 6%/year. If China’s GDP in 2019:Q4 was 4% or 4.5% above 2019:Q1 GDP, then the plunge from the peak in 2019:Q4 to the trough in 2020:Q1 would have been roughly 11%. Does that make sense?

Now consider 2020:Q2 GDP, which was 3.2% above 2019:Q2. Given the 6% annual trend growth, it seems likely that by 2019:Q4, China’s GDP was roughly 3% above 2019:Q2 levels. Thus China is basically claiming that the 2020:Q2 GDP has roughly returned to the levels of the end of last year.

To summarize, China’s GDP fell by roughly 11% in Q1, and returned to roughly the 2019:Q4 levels in the second quarter. That means the growth in the second quarter was a bit over 12% (the growth rate of going up from 89 to 100.)

So where do I get the 60% figure in the post title. It turns out that the US does not report quarter-over-quarter growth rates for GDP; we report quarter-over-quarter growth rates that have been annualized. Growing from 89 to 100 is a bit over 12%, but if you annualize that rate (including compounding) the rate is close to 60%.

The weird thing here is that usually when growth rates between countries are non-comparable it’s because one is a 3-month rate (as in Europe) and one is a 12-month rate. But both the US and China report 12-month growth rates. It’s just that China reports the growth rate over 12 actual months, whereas we look at growth over 3 months and then annualize it. In this case, the two techniques produced stunningly different results.

Soon the US will report Q2 GDP data, which will likely look awful. This post suggests that it won’t be quite as awful as the headline figures suggest (although it obviously won’t be good.)

PS. The best way to report GDP growth is to provide the growth rates according to both the US and Chinese technique. These two figures are more informative about the current state of the economy than either rate in isolation. They each tell us something useful that the other figure does not. So don’t fall into the common mistake of trying to figure out which approach is best. You need both!

What year is it?

The administration devoted its first term to an economic policy that might be described as, “Gin up the economy right now and let future generations pay the price.”

Suddenly, everything has gone wrong with a once vibrant economy. The president is adrift, without answers for the nation’s problems. He public comments seem increasingly rambling and disjointed. He finds enemies all around him, especially in the press. He’s increasingly paranoid. The administration is mired in corruption.

Answer: It’s July of 1974.

Off topic: When I saw this WaPo headline:

Global surge in coronavirus cases is being fed by the developing world — and the U.S.

I thought to myself, “wouldn’t it be simpler to just say:

Global surge in coronavirus cases is being fed by banana republics