Archive for October 2022


Jair, Donald, Bibi and Boris will be back

[Before beginning the post, here’s a new rule for commenters. No more than 2 comments per post, unless replying to people who commented on your previous comment. Violators will be banned.]

In the good old days, failed political leaders would quietly fade into the woodwork. The first President Bush, Gerald Ford and Jimmy Carter all gracefully retired from public service after being defeated. But now that almost every country is becoming a banana republic, those days are gone. Politicians develop personality cults, and try to convince voters that only they can rescue their country.

This FT story on Benjamin Netanyahu nicely describes the phenomenon:

For Yaron Tzidkiyahu, who runs a popular food stall in Jerusalem’s Machane Yehuda market, two things matter in next week’s Israeli election: the economy and security. Unhappy with the government’s approach, he plans to vote for Benjamin Netanyahu.

“I want someone else, but right now there is no one but Bibi,” he said, referring to the former prime minister by his widely used nickname. “Bibi is Gulliver in a land of pygmies.”

The November 1 election will be Israel’s fifth in three and a half years of political gridlock. Like the previous four, the poll is widely seen as a referendum on Netanyahu, a polarising figure who has been Israel’s leader for 15 of the past 26 years.

Bolsonaro, Trump, Johnson and Netanyahu are all corrupt, but voters don’t care. They believe that a larger than life figure can somehow save their country. Before long, all four will be back in power.

History tells us that voters will have to go through a great deal of pain before they understand that demagogues are not effective policymakers. The Russians and Chinese are a bit further along the learning curve.

PS. The closeness of the race in Brazil is one more indication that polls are strongly biased against populist right wing candidates. If Biden goes into election day 2024 with a 5% lead over Trump, he’s almost certain to lose.

PPS. The media might tell you that the left is on a roll in Latin America. Don’t believe them. Below the surface the right is gaining strength. I predict that the right will dominate the region within 5 years. Given everything that’s happened in Brazil, Lula’s 50.9% vote total is pathetic. I’m glad he won (as is the rainforest), but he will be a failed president.

The age of cowardice

There are many commonalities between the extremes of the left and the right, including excessive identity politics and a distrust of the elites. Perhaps the most depressing has been the surge in “cancel culture”, along with the cowardice in moderates unwilling to confront the extremists. This tweet caught my eye:

And yet you still find a few dishonest pundits on the left who deny the existence of cancel culture.

The same phenomenon occurs on the right, where most GOP politicians and even many conservative reporters are afraid to tell the truth about Trump. If Trump were to suddenly die of a heart attack, dozens of GOP politicians would start mumbling about how all along they privately agreed with Liz Cheney, but were afraid of the wrath of the voters.

Yeats described our world 100 years ago:

The best lack all conviction, while the worst  

Are full of passionate intensity.

And here Auden nicely describes our current decade:

I sit in one of the dives

On Fifty-second street

Uncertain and afraid

As the clever hopes expire

Of a low dishonest decade

Waves of anger and fear

Circulate over the bright

And darkened lands of the earth,

Obsessing our private lives:

The unmentionable odour of death

Offends the September night.

PS. And how about this (about the Pelosi attacker):

Ms. Jenkins, said on Twitter that Mr. DePape would be arraigned on Tuesday.

The authorities are looking into whether the suspect is the same person responsible for blog posts that espoused antisemitism and contained an array of angry and paranoid postings, including concerns about pedophilia, anti-white racism and “elite” control of the internet.

Hmmm, he sounds exactly like some of my commenters.

PPS. On a lighter note, this made me laugh out loud:

The populist delusion

In 2016, British voters thought they were striking a blow against the “elites” in Brussels. Six years later, nothing has changed except that the UK has become a bit less open, and a bit poorer than it would have been.

In America, the populists believe that wonderful things will happen if only they can get rid of the elites in the media, in government, in corporations, in universities, and in biomedical research labs. Sort of like the Chinese Cultural Revolution.

Even right wing intellectuals that should know better often have strikingly naive views about the role of elites:

Besides Vance and Masters (whose campaigns declined to comment for this story), Yarvin has had a decade-long association with billionaire Peter Thiel, who is similarly disillusioned with democracy and American government. “I no longer believe that freedom and democracy are compatible,” Thiel wrote in 2009, and earlier this year, he declared that Republican members of Congress who voted for Trump’s impeachment after the January 6 attacks were “traitorous.” Fox host Tucker Carlson is another fan, interviewing Yarvin with some fascination for his streaming program last year. He’s even influenced online discourse — Yarvin was the first to popularize the analogy from The Matrix of being “redpilled” or “-pilled,” suddenly losing your illusions and seeing the supposed reality of the world more clearly, as applied to politics.

Overall, Yarvin is arguably the leading intellectual figure on the New Right — a movement of thinkers and activists critical of the traditional Republican establishment who argue that an elite left “ruling class” has captured and is ruining America, and that drastic measures are necessary to fight back against them. And New Right ideas are getting more influential among Republican staffers and politicians. Trump’s advisers are already brainstorming Yarvinite — or at least Yarvin-lite — ideas for the second term, such as firing thousands of federal civil servants and replacing them with Trump loyalists.

Good luck with that!

During his first term, Trump failed in his objective to Make America Great Again. But hope springs eternal. I will watch with detached amusement as all these “new right” plans come undone in Trump’s second term.

About those deeply held moral views

In 2022, a proposed abortion ban failed by 18 points in conservative Kansas. So what happened after Republican voters realized that anti-abortion politics threatened their electoral prospects?

So what do you really care about? The lives of unborn babies, or tax cuts for the rich?

In one way, all recessions are alike

What is the one common feature of all recessions? The answer is easy. During every single recession, the media is full of reports that this recession is utterly unlike anything in the past. I discussed this point in my book The Money Illusion, but I might as well have been spitting into the wind.

Here’s Bloomberg:

These are strange times, which means the last 30 years of data — maybe even the last 50 years — don’t offer much insight. The normal indicators may not tell us much of anything at all. Even the reliable inverted yield curve that’s supposed to predict recession may be less reliable after years of quantitative easing followed by quantitative tightening.

Perhaps there will be no inflection point when a recession hits. Maybe inflation falls and then we just recover. That’s not unprecedented, but we are entering this period from a different place than we’ve ever been before.

To me, the economic situation seems utterly normal. There was too much demand stimulus, NGDP rose too fast, inflation increased, and policymakers are finally beginning to contemplate steps that would bring inflation down. So what’s new?

In my book, I cited a Time magazine article from 1991 explaining how the recession at that time (which was utterly normal) was supposedly nothing like anything we’d seen before. Today, the article seems almost comical.

Much of the confusion comes from the fact that most journalists and economists are working with the wrong model. The business cycle is actually quite simple. Monetary policy drives NGDP and NGDP drives fluctuations in RGDP. And interest rates do not tell us anything useful about the stance of monetary policy. For that you need to look at NGDP and NGDP expectations.

If you think the Fed has been tightening monetary policy for a year, you might wonder why the economy keeps chugging along with rapid NGDP growth. But what makes you think the Fed’s been tightening monetary policy for the past year? Interest rates?

Here are interest rates in Argentina:

Wow, those sharply rising interest rates must be driving inflation much lower!

Oh wait:

PS. Slightly off topic, but commenters used to be surprised when I told them that easy money wouldn’t improve real wages. The whole point of stimulus is to lower real wages so that firms hire more workers: