Archive for April 2022


Fake new, fake politics

Everyone knows that fake news is one of the big stories of the 2010s. But what about fake politics?

In a sense, almost the entire GOP establishment is a fake organization. They pretend that Trump is their leader, publicly praising the man. But privately they view him as a corrupt leader that was deserving of impeachment. They won’t say this out loud, as they are afraid of their own voters.

The NYT has a good piece on how GOP leaders like McCarthy and McConnell initially wanted to get rid of Trump after January 6, but caved when it became clear that GOP voters objected. (And of course McCarthy lied about it.) Some of the details did surprise me:

During the same Jan. 10 conversation when he said he would call on Mr. Trump to resign, Mr. McCarthy told other G.O.P. leaders he wished the big tech companies would strip some Republican lawmakers of their social media accounts, as Twitter and Facebook had done with Mr. Trump. Members such as Lauren Boebert of Colorado had done so much to stoke paranoia about the 2020 election and made offensive comments online about the Capitol attack.

“We can’t put up with that,” Mr. McCarthy said, adding, “Can’t they take their Twitter accounts away, too?”

Perhaps McCarthy can convince Elon Musk to take away their accounts.

JD Vance has been extremely critical of Trump, basically saying the same sort of things that I say in my blog. So why did Trump recently endorse Vance in the Ohio senate race? Doesn’t Trump know that Vance privately despises him, and only recently changed his tune to win votes? Of course Trump knows that; he’s ignorant but he’s no fool. Vance’s phoniness actually makes Trump even more likely to support him. Trump’s loves seeing all these GOP figures kiss his feet, and its even more enjoyable when he knows that are abasing themselves in doing so. Recall the case in Texas with Bush’s son, or the case of Mitt Romney being interviewed for Secretary of State. Thump loves publicly humiliating people; it’s a way of exercising his power.

The day after the 2020 presidential election, I said that the result was actually bad news. Instead of 8 years of Trump we’d have 12 years of the man. I was mocked in the comment section, particularly in January 2021 when the election markets showed his odds of winning falling below 5%. Who’s laughing now?

And don’t count on terms limits holding. The Constitution does not forbid Donald Jr. from running in 2028 and then effectively turning the job over to his daddy.

Once you become a banana republic, legal constraints are meaningless. Once the ethical norms are gone, government officials will do whatever they wish and no one will stop them.

PS. How many of you made 7-fold returns on Trump contracts based on my post-election advice?

Articles of interest

1. Matt Yglesias points out that as America’s conservatives are rejecting YIMBYism, Canada’s conservative are embracing the freedom to build.

Aitchison is not alone on the Canadian right. Conservative MP Raquel Dancho questioned the incumbent housing minister on land use regulation in Parliament on April 5, while interim party leader Candice Bergen said on April 7: “Canada’s housing crisis can’t be left up to municipalities to solve on their own. We need federal leadership to build more supply.” Pierre Poilievre, another leadership candidate, said that under his fiscal plans, “if they want more federal money, these big-city politicians will need to approve more homebuilding.”

2. Sadly, Miami’s commissioners do not believe in YIMBYism:

Miami commissioners voted 4-1 last week in favor of an ordinance that would essentially force developers to build more parking.

“This is not a pedestrian and bicycle city,” Commissioner Manolo Reyes said. “we don’t have a mass transit system, period.”

Reyes went on to complain that people were parking in front of his house due to a lack of parking space. . . .

Commissioners are going against a recommendation of a Miami zoning task force, which recommended further reducing minimum parking requirements. . . .

They also overrode the Planning and Zoning Board, which voted against the plan. One member of that board called the proposal “garbage.”

Requiring more parking will make housing even less affordable to build in Miami, and smaller developments might become completely unviable, advocates say.

3. Janan Ganesh has an excellent article on the value of optimism:

The modern world is said to over-reward academic intelligence, and so it does. Of the most successful people I know, though, none are the very smartest in their organisations, much less their generational cohorts. Beyond a certain cognitive level, another trait seems to become more decisive. “Optimism” is the crispest word for it, but it gives a banal ring to what is a complex and eerie mental gift: the sifting for good news among the bad, the willingness to magnify and even invent some, the reinterpretation of adverse events as what one had wanted all along.

It can border on self-deception. But it also gets people through the night. And the most underrated component of success is continuing to show up.

Ganesh speaks of optimism in instrumental terms, as an aid to success. I’d go further and argue that optimism is success. Listed in order of importance in generating utility, I’d say:

1. Optimism

2. Beauty (and more broadly physical advantages such as talent in sports and dancing)

3. Wealth

4. Intelligence

Progressives worried about “inequality” should worry most of all about optimism inequality, then beauty inequality, then wealth, then intelligence.

4. This tweet hits the nail on the head:

5. I’m not sure if FBI agents believe that black lives matter, but I have no doubt that they believe wealthy lives matter:

When FBI agents served a search warrant at Abou-Khatwa’s home in Kalorama Heights, a swanky D.C. neighborhood “favored by diplomats and power brokers,” there was no answer at the door. But instead of breaching the front door, the agents went around the back to preserve “the aesthetics” of an “affluent neighborhood.”

While that issue was not part of Abou-Khatwa’s appeal, Millett said, “I found this deeply disturbing.” When it became clear that a forced entry was necessary, an FBI agent testified, “the decision was made, since it was an affluent neighborhood,” to do it inconspicuously. “Due to the aesthetics of the neighborhood,” he said, “we decided to use a rear entrance so as to maintain the integrity of the front of the residence.”

6. Literally NOTHING surprises me anymore. Polls suggest that Americans are much more likely to blame the US for the Ukraine war than are residents of Europe or Brazil? I don’t even recognize my country any longer.

Take a deep breath; gotta maintain my optimism here . . .

7. Unfortunately, the “man on horseback” is on the rise all over the world. The Economist has a good review of a new book by Gideon Rachman, entitled “The Age of the Strongman.”

Mr Rachman argues convincingly that the strongman style is a continuum, in which its exponents’ affinities are amplified or muffled by the particular political system in which each operates. . . .

The harm is not just to the people they oppress or the national political systems that they corrode. Strongmen also chip away at global institutions, international norms and multilateral co-operation. Many are suspicious of free trade. Few are inclined to endure much inconvenience to curb climate change. They are prone to adventurism and aggression in foreign policy—witness Mr Putin’s murderous invasion of Ukraine.

Putin supporter Viktor Orban was just re-elected in Hungary, a country that’s just barely holding on to democracy. Putin supporter Marine Le Pen might win in France, and Putin admirer Donald Trump is likely to win in 2024. He privately told his aides that he intended to pull out of NATO if re-elected. Putin cannot defeat the Ukrainians, but he can seduce the West.

It’s getting harder to be optimistic. . . .

8. The Economist has an interesting article discussing how Putin’s views changed over time:

[T]he onset of the covid-19 pandemic two years ago brought a raising of the ideological stakes. At the time, the most discussed aspect of the constitutional changes that Mr Putin finagled in July 2020 was that they effectively removed all limits on his term in office. But they also installed new ideological norms: gay marriage was banned, Russian enshrined as the “language of the state-forming people” and God given an official place in the nation’s heritage.

Mr Putin’s long subsequent periods of isolation seem to have firmed up the transformation. He is said to have lost much of his interest in current affairs and become preoccupied instead with history, paying particular heed to figures like Konstantin Leontyev, an ultra-reactionary 19th-century visionary who admired hierarchy and monarchy, cringed at democratic uniformity and believed in the freezing of time. One of the few people he appears to have spent time with is Yuri Kovalchuk, a close friend who controls a vast media group. According to Russian journalists they discussed Mr Putin’s mission to restore unity between Russia and Ukraine.

It also feels like China’s gone to a much darker place since the onset of Covid. Someday, we are going to wake up and find that we miss globalization.

9. Even here in Orange County the forces of darkness are getting closer each day. Our local multiplex cinema is showing The Kashmir Files. This is from a review in The Economist:

These other casualties get no mention in the film. Instead, within its first 15 minutes we see Muslims betraying Hindu neighbours, chanting “Convert or die!”, beating Pandit children and visiting unspeakable (but apparently not unfilmable) acts of savagery upon women. By the end of the film it is not just the awfulness of Muslims that is doggedly bludgeoned into viewers. So is the perfidy of whiny leftists, intellectuals and politicians who dare suggest that Muslims, who are 95% of the Kashmir Valley’s population, might be victims of a sort, too. Small wonder that in cinemas across India hot-headed youths, many of whom appear to belong to extreme Hindu-nationalist groups, are making rousing sectarian speeches.

The purpose of these films seems to be to whip up enthusiasm for oppressing India’s Muslims. Lots of people here in Orange County support Putin, Xi Jinping and/or Modi. These people are all around us.

But I try to remain optimistic. I’m relatively old, and thus I may avoid seeing the full impact of the rising wave of nationalism.

Tell Matt to stop being so presumptuous

This Matt Yglesias tweet (discussing The Talented Mr. Ripley) caught my eye:

Matt should speak for himself. I knew this film was a masterpiece when I first saw it in 1999.

PS. For those who don’t get the joke, Yglesias frequently complains about annoying news headlines of the form:

X is not what you think it is

Matt is very smart, and generally knows what X is before being told by some stupid young reporter than he doesn’t know what they know.

PPS. You guys don’t know this, but the earlier French version with Alain Delon is roughly as good. (It’s the plot that makes these two films so good.) But at a cocktail party you should tell people that the French version is much better, because it’s the original and because . . . well, because it’s French. That’ll impress them.

PPPS. And don’t forget to preface your observation with, “You probably don’t know this, but . . . “

What does successful Fed policy look like?

During 1994, the Fed unexpectedly increased interest rates, and this helped to preserve price stability and high employment for many more years. But according to the FT, 1994 is a cautionary tale:

The current Fed approach to communicating with market participants is its way of dealing with what could be called the 1994 problem. In February of that year, the US central bank caught investors around the world off guard when it raised rates for the first time in five years — by 0.25 percentage points to 3.25 per cent.

US bond prices fell and the S&P 500 index dropped 9 per cent over the next month. Amid the ensuing turmoil, California’s Orange County, which had used public money to make complex bets that interest rates would remain low, filed for bankruptcy.

In the years that have followed, the US central bank has taken pains to avoid surprising the markets, which makes sense. Dislocations of the 1994 kind obviously complicate the Fed’s mission to promote price stability and maximum sustainable employment.

That final sentence makes no sense. If interest rates are volatile but inflation and employment are stable, that counts as a big success, doesn’t it? Why would the Fed prefer stable interest rates to a stable economy? Why would “dislocations” complicate Fed policy? I’m an Orange County resident, and even I couldn’t care less about their bankruptcy.

Perhaps the Fed avoided an unexpected rise in rates late last year due to fear of destabilizing the financial markets. If so, then the Fed’s desire to avoid surprising the markets has produced a very unstable economy, with an increased risk of recession in 2023.

I don’t want to make too big a deal of the Fed’s interest rate policy, which is not the biggest problem at the moment. The main problem is the Fed’s abandonment of FAIT. That’s the primary cause of the current high inflation. The Fed has lost credibility.

Our first mini-recession?

AFAIK, the US has never had a mini-recession, which I define as a economic slump where the unemployment rate rises by between 1 and 2 percentage points. That’s kind of weird, as all of the business cycle models that I am aware of suggest that mini-recessions should be more common that larger recessions, just as small earthquakes are much more common than big earthquakes. In these models, recessions are generally caused by “shocks”. So why don’t small shocks create small recessions?

I don’t know of any economists who have answered this question. Heck, I don’t even know of any economists who have asked this question. But FWIW, Deutsche Bank is forecasting that America will experience its first mini-recession next year:

The U.S. will tumble into a recession next year as the Federal Reserve jacks up interest rates to combat high and widening inflation, Deutsche Bank economists David Folkerts-Landau and Peter Hooper said in a report on Tuesday. . . .

Under the forecast, U.S unemployment rises sharply to 4.9% in 2024. Joblessness in March clocked in at 3.6%. 

I have a policy of not forecasting things that cannot be accurately predicted. One of those things is asset prices. Another is business cycles. Instead I describe factors that influence asset prices, or that make the economy more unstable. As an analogy, I did not predict Russia would invade Ukraine this year; I suggested that Putin’s Russia was a greater threat to world peace than Xi Jinping’s China, at a time when most of our so-called “experts” were suggesting the opposite.

I will say that this post from last July is looking somewhat better today.