Archive for March 2024


Films of 2024:Q1

I read another Gene Wolfe trilogy, this one about ancient Greece. Not as good as the three “Sun” series, but still enjoyable. Stefan Zweig’s The World of Yesterday was another highlight, a brilliant work of social science masquerading as a memoir. Benjamin Moser’s The Upside Down World is an excellent study of Dutch painting, and more. How good could Carel Fabritius have been? A few of his paintings remind me a bit of Velazquez. I also enjoyed Art of the Japanese Postcard. I’ve also been trying to catch up on several decades of pop music. (I’m afraid my taste is mostly stuck in 1965-80.) Lana del Rey is my newest favorite. Alvvays has some infectious pop for when you are driving, not too syrupy. Black Country, New Road is an interesting group (might appeal to Radiohead fans?) And even 2 generations later, we still have “new Dylans.” For TV, I tried The Regime and quickly gave up. It’s like Succession, but with all the good stuff removed. I recently started Ice Cold Murders, which is one more example of the now global phenomenon of complex flawed detectives with a heart of gold. I guess viewers can never get enough of this formula, although I’m getting close. At best, they are painless sociological lessons on various subcultures—in this case Alpine Italy.

2024:Q1 films

Newer Films:

Monster (Japan) 3.9 Kore-eda’s best work since Nobody Knows, and one of the best films of the past decade. Every single aspect of the filmmaking is first class, including screenplay, acting, cinematography, sound, etc.

Anselm (Germany) 3.8 An outstanding art documentary, directed by Wim Wenders. My only complaint is that I would have liked to see more on the exhibition in the Scuola Grande di San Rocco. There are interesting parallels between the style of the paintings he exhibited and the Tintoretto masterpieces in the same location.

In the Court of the Crimson King (UK) 3.7 In some ways, this is better than the Anselm documentary. But I like Anselm better as an artist, so I rate that film higher. There are some very funny sequences, as well as some deeply moving ones.

Perfect Days (Japan/Germany) 3.7 As I get older, I increasingly appreciate this sort of minimalist film. My only reservation is that at times I felt like the film was more about Wim Wender’s impeccable taste in pop music than the story he was filming.

The Movie Emperor (Hong Kong) 3.4 I generally don’t appreciate Chinese comedies, but this one was pretty effective in touching on a lot of contemporary themes. I had recently visited the Arab world, and this film convinced me that (compared to the Arab world) Hong Kong culture is much closer to American culture.

Oppenheimer (US) 3.3 Nolan’s an excellent sci-fi director, but real world science is not his forte. The visuals are fine, but didactic screenplay is tiresome. The viewer doesn’t want a three-hour history lesson on material that is already well known—or at least this viewer didn’t. This is unfortunate, as the film does have some very fine scenes. (But David Lynch’s take on the Trinity test in Twin Peaks is far superior.)

Dune 2 (US) 3.3 I saw this just a few days after it opened, and there was just one other person in the theatre. Visually impressive on occasion, but somewhat inert—lacking narrative momentum. I can’t imagine anyone wishing it to be longer. Cold and austere films can work on occasion (2001, Barry Lyndon, Stalker, etc.) but Villeneuve is no Kubrick or Tarkovsky. Heck, he’s not even Ridley Scott, as we saw with his bland Blade Runner remake.

Giannis: The Marvelous Journey (US/Greece) 2.8 He’s not among the MVP leaders (due to voter bias), but he’s probably had the best season of any NBA player. Strictly for Bucks fans.

Upgraded (US) 2.5 What happened to rom-coms? They used to be like noirs—reliable entertainment.

Older Films:

Nostalghia (Russia/Italy, 1983) 3.9 It was a privilege to see a restored version of this on the big screen. The first half in particular had one stunning image after another. This is often regarded as Tarkovsky’s weakest film, but everything he did is a masterpiece. The sublime final shot is like a Caspar David Friedrich painting come to life. Hard to see how he created it without any sort of CGI. (I beg of you, don’t watch it on TV.)

The Idiot (Japan, 1951, CC) 3.8 Who knows how good this would have been if 100 minutes had not been cut out by the studio (and lost forever.) It’s right up there with the butchering of The Magnificent Ambersons as one of the great artistic crimes of the 20th century. The film got mixed reviews, which confirms my view that many film critics are incompetent hacks. Directed by Kurosawa the year after Rashomon and the year before Ikiru, i.e., near the peak of his creativity.

The Munekata Sisters (Japan, 1950, CC) 3.7 A characteristic Ozu film from near the beginning of his greatest period.

Betty Blue (France, 1986, CC) 3.7 If Heraclitus were still alive, he’d say that no man watches the same film twice. In 1986, I thought Betty was the central character. Now I realize it was actually Zorg, who is the heart of this fairy tale for adults. I also noticed a bisexual subtext, surprising for a film that otherwise seems so heteronormative. I’m not sure how to interpret this crazy film—perhaps that living life to the fullest is a sort of mental illness. A film to make you feel both better and worse about your own (boring) life.

The Other Side of Hope (Finland, 2017, CC) 3.6 Like many Kaurismaki films, much of the humor is rather subtle. But the scene where the Finnish restaurant adopts a sushi menu is one of the laugh out loud funniest that I’ve seen in years.

Youth Without Youth (US, Romania, 2007, CC) 3.6 The critics panned this one, and I can see why. The supernatural plot is not at all believable. But the images are so astonishing that I liked the film despite its flaws. For a few moments, I was transported back to the sublime Coppola films of the 1970s.

The Yards (US, 2000, CC) 3.6 Fans of the Godfather and the early films of Martin Scorsese need to check out this excellent crime drama. It’s amusing to see James Caan essentially playing the Al Pacino role from The Godfather II. It got mixed reviews, although I’m not sure why.

I Vitelloni (Italy, 1953, CC) 3.6 This early Fellini film might seem to go over familiar ground, but that’s because it’s been copied by so many other directors.

Birth (US, 2004, CC) 3.6 Don’t believe the critics, this Jonathan Glazer mystery will stick in your mind long after the film is over. Nicole Kidman is outstanding. Glazer is an underrated director.

Godzilla (Japan, 1954, CC) 3.5 At first this seemed like a run-of-the-mill 1950s horror film. But about half way though it began to achieve a sort of tragic gravitas that was totally unexpected (at least to me.)

They Live By Night (US, 1948, CC) 3.5 In this influential noir, Nicolas Ray decides not to show the crimes being committed, focusing instead on the young lovers. I respect this choice, even though it probably made the film a bit less entertaining.

Silent Partner (US/Canada, 1978, CC) 3.5 I probably overrated this, but I’m a sucker for bank heist films with late 1970s decadence. It’s an interesting question as to which year was peak lasciviousness for western civilization. Perhaps 1977 or 1979, but I vote for 1978. It seemed like the only bra in the film was worn by a man.

Vivre sa vie (France, 1962, CC) 3.5 After 60 years, I no longer find Godard’s experiments to be all that interesting. But he’s a highly skilled filmmaker, and Anna Karina is (as usual) sublime.

10 Things I Hate About You (US, 2003) 3.4 Saw this in a theatre full of young people. Good high school comedy featuring a bunch of young actors that would soon become stars.

Little Odessa (US, 1994, CC) 3.4 Good crime drama somewhat in the style of Mean Streets, but dealing with the Russian mafia. Same director as The Yards (James Gray).

Mogambo (US, 1953, CC) 3.4 A remake of Red Dust, with Clark Gable playing the same role. Unfortunately, he’s 21 years older than in the previous version, much too old for the role. And the scenes of Africa are not very good, despite the use of Technicolor. Fortunately, John Ford is the sort of director that can turn even an unpromising film project into a quite entertaining movie.

The Moon Has Risen (Japan, 1955, CC) 3.4 Directed by a woman, with the style heavily influenced by Ozu (who co-wrote the script.)

Love Letters (Japan, 1953, CC) 3.4 Same director, but more melodramatic.

The Umbrellas of Cherbourg (France, 1964, CC) 3.4 Critics loved this film, but I have no ear for show tunes so it went right over my head. I will say that the gas station in the final scene is the prettiest one I’ve ever seen. Lots of eye candy.

Backfire (US, 1950, CC) 3.4 Not one of the classic noirs, but has a lot of very satisfying scenes. Quite entertaining, although it fades a bit at the end.

The Upturned Glass (UK, 1947, CC) 3.3 In this early film, the James Mason we know and love was not quite fully formed. Here he’s rather nervous and intense; not the calm, elegant and self-assured man I’m used to seeing in his later American films.

Drugstore Cowboy (US, 1989, CC) 3.3 The humor works better than the drama in this Gus van Sant film (as is often the case with “dramadies”.)

Starman (US, 1984, CC) 3.3 Close Encounters started strong and then ran out of inspiration. This John Carpenter film was sort of the opposite. It started rather weak—skirting the line between silly and charming. But it found a nice groove in the last 30 minutes. (To be clear, Close Encounters was much better.)

Macao (US, 1952, CC) 3.2 I never understood the appeal of Jane Russell. For a beautiful woman, she’s kind of ugly. Fortunately, the film also has Robert Mitchum and Gloria Graham. And it’s directed by Josef von Sternberg.

The Erl King (France, 1931, CC) 3.1 The images are art nouveau, a style that was already several decades in the past when the film was made. Special effects often look dated as time goes by, and this is no exception. Based on the famous Goethe poem.

Pandora and the Flying Dutchman (US, 1951, CC) 3.0 James Mason is darkly suave and Ava Gardner is radiant. So why the mediocre rating? The script is cringe-worthy, perhaps the worst I’ve ever seen in a major Hollywood production.

Code 46 (UK/China, 2003, CC) 3.0 It was filmed in what was supposed to be a futuristic Shanghai, but the Shanghai of 2003 already looks rather antique. Timothy Robbins is badly miscast—no idea what the director was thinking.

Je t’aime, je t’aime (France, 1968, CC) 3.0 This critically acclaimed film might have been impressive when it first came out, but today the time travel gimmick seems like a distraction.

Betrayed (aka When Strangers Marry) 3.0 (US, 1944, CC) Crude but fairly engrossing film noir, which comes in at just 67 minutes.

My Week With Marilyn (UK, 2011, CC) 3.0 A pleasant film with one big problem—no one can capture the magic of Marilyn Monroe. In fairness, Michelle Williams fares better than Kenneth Branagh, who falls far short of recreating Olivier’s cold intensity.

Repeat Performance (US, 1947, CC) 2.9 Think of this as the very first Twilight Zone episode. In a supporting role, Richard Basehart plays a poet who is placed in an insane asylum because he’s gay.

The Woman Condemned (US, 1934, CC) 2.8 There’s a fine line between avant garde and inept, and this interesting film noir straddles both sides of the line. Unfortunately, the print on Criterion Channel was a mess, at times almost unwatchable. Perhaps a restored version would change my view. (The New Yorker liked the film.)

The Great Sinner (US, 1949, CC) 2.6 Ava Gardener and Gregory Peck are wasted in a film that alternates between silly and pathetic. Like Harrison Ford, Peck could be charming when he was young, but became a something of a humorless bore as he aged. In this film we see both sides of his personality.

Cocktail (US, 1988, CC) 2.5 This is a fairly bad movie, but I kept watching out of fascination as to how Hollywood is able to turn junk into box office gold. It’s helps to have the world’s most charismatic actor. A good film to show to young people who wonder what the late 1980s felt like.

It’s All About Love (Denmark/US, 2003, CC) 2.2 Why did I keep watching such a bad film? I suppose it was curiosity. The film has good actors and a good director (Vinterberg), so I had a sort of morbid fascination with what would come next. Sean Penn’s performance is so bad it’s almost funny.

PS. I mentioned Moser’s book on Dutch art. Jacob Ruysdael is an underrated artist:

And this Japanese postcard is better than 75% of the paintings in the Louvre:

And since it’s Easter, how about a deeply religious painting:

Want something even more religious? How about the same artist in a self-portrait as Jesus:

The Fed is clumsy

The Fed should not be targeting interest rates. But if it insists on doing so, then the most efficient regime would adjust the fed funds rate target by basis points (i.e., 0.01%), not quarter point increments. In addition, the rate should be adjusted daily based on the median vote of the FOMC. It should move around like a market price, rising and falling unexpectedly as new information comes in each day.

Instead, the Fed has adopted a clumsy procedure of quarter point adjustments every 6 weeks. Even worse, they’ve made the system even more clumsy by investing inflection points with vast significance:

Chair Jerome Powell, who is speaking later Friday, has stressed the need for patience, saying the timing of the first rate cut would be “highly consequential.” Policymakers will have access to one more PCE report, in addition to others on consumer and producer prices as well as employment, before their next meeting starts on April 30.

PS. Here’s a prediction for 2024: Inflation will remain above the Fed’s target, disappointing those who expected a soft landing. The economics profession will fall all over itself making up phony “supply-side” excuses for the lack of progress against inflation (which has obviously been a mostly demand side problem, and will remain so in 2024.)

As always, watch the NGDP growth rate, which remains too high. From the same Bloomberg article:

“We really just haven’t seen that consumer fatigue that we were getting some hints of in the last month’s data,” said Sarah House, senior economist at Wells Fargo & Co. “That’s going to make it really hard, I think, for businesses to hold the line on prices if consumers are still willing to splash out at these levels.”

Translation: If NGDP growth remains high, the inflation will persist.

A question for critics of democracy

There’s a certain type of person that doesn’t trust democracy. On the left, there’s a perception that difficult issues must be left to the experts. On the right, a fear that “the mob” will try to extract wealth from the rich. These people have trouble explaining Switzerland, by far the most democratic country on Earth.

So here’a a question for all you right wing democracy skeptics. Chicago recently voted on a referendum to create a “mansion tax” on sales of real estate valued at $1,000,000 or more. How would you expect the vote to have gone? Here are a few helpful facts:

1. The median home price in Chicago is $359,900
2. Chicago has a very large population of renters, often living in low income black and Hispanic neighborhoods. Many live in public housing.
3. The recently elected mayor supported the proposal.
4. If it fails, alternative taxes or benefit cuts will be required.

Given those facts, how would voters have responded to this referendum question? Is this what you expected?

Chicago voters rejected Mayor Brandon Johnson’s plan to increase taxes on real estate transactions of $1 million or more, dealing a blow to the first-term Democrat’s progressive agenda.

About 53% of voters opposed the referendum, according to the Chicago Board of Elections. The measure would have allowed the city council to increase transfer levies on upmarket residential and commercial property sales.

I suspect that low income Chicagoans understand that if all the rich move to Florida it will make Chicago look like Detroit, and that won’t be to their benefit.

PS. You might wonder how I knew immediately after the 2020 election that Trump would be back in 2024. It wasn’t hard to figure out that after 4 years of Biden, America’s voters would be in a very conservative mood. Even San Francisco voters are shifting to the right. The pendulum effect.

What do you mean by “you”?

People ask me: “What do you think about X?” It might be the path of interest rates or stock prices or the rate of inflation. I might respond “Well, the market is predicting . . . ” They respond; “No, what do YOU think about X.”

I can only respond, what do you mean by “you”?

Most people probably find me to be rather annoying, as I don’t believe in lots of things that are widely accepted, like asset bubbles, objective truth, and personal identity. That last one is especially hard to explain.

It’s not so much that I have multiple personalities, rather my single personality has multiple aspects. Yes, I may have a hunch as to where some economic variable is headed, and my hunch may differ from the market forecast. But unlike most people, I don’t privilege that hunch over my rational belief in the EMH. It makes no sense to speak of what I “really believe”, as I have multiple beliefs, located in different parts of my brain.

A few years back, I got into hot water for a post where I said I thought another pundit’s ideas seemed crazy, but on the other hand some extremely brilliant economists thought her views were quite interesting, so I had to accept that my gut reaction might not be correct.

Because most people do believe in the concept of personal identity, they took my gut reaction as my “real belief” and my reference to what other people believe as just so much window dressing. But that is not how I look at things. If my life were on the line, I’d go with what the market forecast, not my “hunch” as to where an asset price was headed.

There are many issues where people should not hold strongly held views. I’ve read many articles on AI risk. I’ve listened to podcasts. It’s obvious that the most brilliant minds in the world have reached absolutely no consensus on the question of whether AI poses an existential threat. It’s also obvious to me that many of these experts are much smarter than me. Not just smarter in the sense that they know more about AI whereas I know relatively more about the Fed (although that’s true), but smarter in the sense that they have far higher IQs.

So if someone far smarter and far more well informed than me tells me that AI is extremely dangerous, and he or she has studied the issue intensively for their entire adult life, on what possible basis could I tell them that they’re wrong? Do you think I have a counterargument that they’ve never heard? Do you think that they aren’t smart enough to understand my arguments?

“Previous fears over technology proved to be groundless, or wild overreactions.”

“Oh really, and which of those technologies involved creating entities that were far smarter than humans.”

At the same time, there are equally bright people who don’t see AI as a threat to humanity. Do you think I know something that they don’t know? Of course not. So I’m agnostic on the AI risk question. You should be too.

When it comes to personal beliefs, people tend to have big egos. They are overconfident in their views on politics, religion, economics, sociology, even sports.

On almost any issue, you should have at least two views. An inside view, which represents your hunch as to what is true, and an outside view that represents the rational forecast of the truth given both your hunch and weighted average of the views of experts. When it comes to AI risk, I put a weight of roughly zero on my inside view, and 100% on the experts. The problem here, of course, is that even the experts don’t agree.

PS. Wait, didn’t I say I don’t believe in truth? No, I said I didn’t believe in objective truth. When I say something is true, I merely mean that I predict that this will be the consensus view in the very long run. Since we never reach the end of time, there is no objective truth. It’s always provisional—things regarded as true, with varying levels of confidence.

PPS. Think about these questions:

1. What would an entity with an IQ of 250 be capable of doing?

2. What would an entity with an IQ of 250 choose to do?

You think you know the answer to either question? Oh really, what’s your IQ?

BTW, I’m agnostic on the question of whether we could even build something this smart.

Price indices: constant utility or constant quantity?

Josh Hendrickson argues that an ideal price index should include asset prices. I am not going to address that issue, as I’m not sure what an ideal price index is. But it’s a good post—worth reading if you are interested in price indices.

Instead, I’d like to focus on a less controversial claim in the Hendrickson post:

From that description, one can easily understand why I called that “ideal.” How would one go about finding changes in the cost of a constant-utility basket of goods when utility isn’t really observable?

A practical solution to estimating a price index might be as follows. Consider two-period, two-good example. We observe the price of eggs and the price of milk each period. We also observe the quantity of eggs purchased and the quantity of milk purchased each period. If we want to track changes in prices over time, we could calculate expenditures for period 1 and period 2 using the quantities of eggs and milk purchased in the first period. Alternatively, we could calculate expenditures for period 1 and 2 using the quantities of eggs and milk purchased in the second period. In each case, the first period’s expenditure could be normalized to 100 and the second period price level could be calculated by multiplying 100 by the ratio of expenditures in period 2 to expenditures in period 1. Or, if we want to get really fancy, we could take the geometric average of the ratio of expenditures using both methods and multiply that by 100 to get the price level in the second period.

The purpose of doing any of these three options is that, since you are holding quantities constant across periods, your measures of expenditures are only capturing changes in prices. Effectively, what you are doing is constructing a weighted average of prices in which the weights are fixed quantities of the goods.

This is all pretty standard, similar to what you might find in an economics textbook. But this discussion implicitly assumes an equivalence between fixed quantities and fixed utilities. I will argue that this assumption is not justified, and then use my analysis to explain problems with the Michigan survey of inflation expectations.

To make things as simple as possible, imagine an economy with only one good and no quality changes over time. According to our textbooks, it should be easy to measure the rate of inflation in that sort of economy. But even in that case the inflation rate will differ depending on whether you assume constant utility or constant quantity.

Imagine an economy where the aggregate quantity of the only good increases at 5% per year, while the price of that good rises by 10%/year. You can think of that economy as having a 15% nominal growth rate. (I’ll ignore compounding for simplicity; technically it’s 15.5%). How much extra income would a person need each year in order to maintain a constant utility? I’m not sure, but I’m pretty confident the answer is not 10%, and it’s also not 15%.

1. A person that got a 15% raise would be able to buy 5% more real goods. So presumably their utility would be higher than before.

2. A person that got a 10% raise would be able to buy the same amount of goods, while that person’s acquaintances would be 5% ahead in real terms. So presumably that person would feel worse off in terms of utility.

This suggests that a measure of inflation that holds utility constant would be somewhere between 10% and 15%. You can think of utility as being a function of both absolute quantity of consumption and consumption relative to other people. Furthermore, it would vary by individual. A loner with no friends might be satisfied with a 10% raise, while a person that acutely feels any sort of “unfairness” in life might need almost 15% more income to maintain a constant utility. In other words, there’s a different ideal price index for each person.

Let’s assume that instead of holding utility constant, we hold quantity constant. Then it becomes easy to calculate inflation—which would be exactly 10% in this case. Unfortunately, our textbooks seem to conflate “constant quantity” and “constant utility” in a way that ignores the social aspect of consumption.

My thought experiment involves an economy where quantity grows over time. But the same problem occurs with quality improvements. Here again, a “hedonic” adjustment that attempts to account for quality changes will typically come up with a lower estimate of inflation than an index that holds utility constant. Thus the BLS says that the price of TVs has fallen by more than 99% since 1959 (due to quality improvements), but average people don’t think that way. They want to know how much more it costs to buy the sort of TV their neighbors have, not how much more it costs to buy the sort of TV their grandparents had.

Notice that the Michigan survey of 12-month inflation expectations generally hovers close to 3% from 2000 to 2020, even as measured inflation averaged a bit under 2%. Economists might be inclined to write off the public’s estimate as being “biased”, or “uninformed”. The public doesn’t understand about substitution bias, or quality changes.

Or perhaps the public is taking seriously the “constant utility” definition of inflation. Perhaps they are saying they need about 3% more income to maintain their utility at a constant level. Notice that the public’s estimate of inflation is slightly below the average rise in per capita nominal incomes, and slightly above the inflation estimate you’d get using the economists’ preferred “constant quantity” approach. That’s the same qualitative result we derived in my thought experiment above. Coincidence?