This week’s articles

1. Nicholas Kristof has a good piece on political dysfunction on the West Coast. He correctly points out that the problem is worse than in left wing areas of the East Coast. (I wish the editor had used the term “progressive” in the title, not “liberal”.) He also sees a few glimmers of light:

One encouraging sign is that the West Coast may be self-correcting. I’ve been on a book tour in recent weeks, and in my talks in California, Oregon and Washington I’ve been struck by the way nearly everyone frankly acknowledges this gulf between our values and our outcomes, and welcomes more pragmatic approaches. 

I see the same thing, as we seem to be past “peak woke”. But the West Coast has a loooong way to go. if you are wondering about the sort of thing Kristof was referring to, check out this ABC news story.

2. Bill Kristol has an amusing tweet. One characteristic of a banana republic is a lack of self-awareness. They don’t even seem to be aware of how silly they look. Places like North Korea experience an almost unimaginable amount of suffering. But if you look past the tragedy, the situation there is actually extremely funny. Let’s hope America stays the lucky country, as we sure as hell don’t deserve our success.

3. A very funny tweet on what it takes to build a Costco in LA.

4. A conservative writer at The American Mind admits that conservatives have bad taste:

There must be reasons, besides cunning Gramsci-esque counter-maneuvering, why efforts to launch a conservative artistic movement so often droop their way unto death. There must be reasons why right-wing “alternatives” to mainstream culture still often feel like consolation prizes. I can’t help but suspect that what we have here is a problem of taste.

Sorry guys, but this is true.

4. According to the National Review, Trump’s conviction seems to have pushed 100,000 voters toward Biden:

The day he was convicted in Manhattan, Donald Trump led President Biden in the RealClearPolitics average by nine-tenths of a percentage point. Since then, the voting public has had time to ruminate on the significance of the presumptive Republican nominee’s legal straits, even the possibility he could be sent to jail, and figured: Meh.

As of publication time, Trump’s lead in the RCP average has dipped — to eight-tenths.

Of course that 100,000 shift to Biden is plus or minus a couple million. (No link, it came via email.)

5. This is a puzzling remark:

China’s President Xi Jinping told European Commission President Ursula von der Leyen that Washington was trying to goad Beijing into attacking Taiwan, according to people familiar with the matter.

The Chinese leader has also delivered the warning to domestic officials in his own country, one person said.

This can be interpreted in several different ways. One interpretation is that he’s getting ready to blame the US for a Taiwan war. Another is that he’d rather avoid war, at least for the time being, and is telling nationalists within China that going to war now would play into US hands. Recall that Leopold Aschenbrenner claims that we are in a battle with China for AI supremacy. A war over Taiwan would likely cause China to lose that war, as it would face draconian economic sanctions.

This is one reason I oppose most US protectionist policies aimed at China (except where there’s a clear military angle.) I want China to have a lot to lose if it invades Taiwan. Here’s Dmitri Alperovitch (who is generally quite hawkish on China):

Complete decoupling is impossible given the volume of trade that exists. We also can’t get any of our allies on board with full decoupling. Finally, it’s counterproductive because if you have no economic relations, then you actually have no leverage. We want more leverage over them to try to deter nefarious actions.

6. The Economist has a good article discussing who hates whom in various European countries. This is just a few highlights:

The religious dimension remains crucial; in France antipathy towards North Africans is markedly higher than towards black Africans, according to the latest report by the country’s anti-discrimination monitor. . . .

Current events can also reduce prejudice. In the 1990s Italians stigmatised Albanian immigrants. But as Albania has grown more stable and less poor, they have slipped off the list of feared minorities. . . .

And when all else fails, they go after the Roma. Robert Fico, the Slovakian prime minister who survived an assassination attempt on May 15th, began his political career as a left-wing populist and is currently a right-wing one, but his Roma-bashing has remained constant. Portugal long lacked a big far-right party, explains Alexandre Afonso of Leiden University: it had little immigration, and those who did come, such as Brazilians, were not viewed unfavourably. So when the hard-right Chega party launched in 2019 it targeted the small, impoverished Roma population. Chega is now polling at 18%.

7. For the third time in a row, Wisconsin is likely to be the tipping point state in the election. The Economist has an interesting article about the state. One thing is clear, whatever this election is about, it’s not about “the issues”:

Charlene, a farmer in western Wisconsin who works a second job as a cleaner to supplement her family’s income, says she’ll be voting for Mr Trump because of his strength on the economy and health care. Her son struggled to afford care when he fell ill recently. Because of Republican resistance, Wisconsin remains one of ten states yet to expand Medicaid to cover those whose incomes fall just above the poverty line.

8. People who favored making pot illegal ought to be ashamed of themselves. Thousands rotted in prison for selling pot, despite the fact that legalization has produced none of the disasters that drug warriors predicted:

In 2014, 44% of Americans over the age of 12 said that they had tried the drug. By 2022, the figure had risen to just 47%. Regular use by adolescents is still much lower than it was in the 1970s.

An extensive study published last year in the journal Psychological Medicine found that people who live in states where weed is legal consume more than their identical-twin siblings in states where it is not. But they are no more likely to suffer mental, physical, relationship or financial problems. Another study looked at health-insurance data to see whether states with legal cannabis saw more claims for psychosis. The authors found no relationship.

9. Singapore benefits from the fact that most American protectionists are dumb as a rock:

Singapore also has one of the largest current-account surpluses in the world. As a small country and a close partner of America in security, Singapore avoids the scrutiny others might endure for its huge savings and managed exchange rate. The fact that America has a bilateral trade surplus with Singapore tends to keep it out of the glare of protectionist American politicians. 

Bilateral deficits are obviously meaningless. Fortunately, our politicians are too dumb to understand that Singapore’s surplus contributes to our deficit.

10. Matt Yglesias has another great post explaining why Trump’s first term was terrible. He concludes as follows:

And it’s definitely true that if you judge him by outcomes rather than inputs and also make an exception for the bad outcomes, then his presidency was fine. . . . Everyone makes mistakes and ideally learns from them. As best I can tell, what Trump learned from his term is that he needs to double-down on surrounding himself with craven loyalists who won’t contradict him. Not only did he tell congressional Republicans that we should replace the income tax with tariffs, but to the best of my knowledge, nobody bothered to tell him that’s a stupid idea, because at this point everyone knows that you either get on the Trump Train or do what Mitt Romney is doing and quit congress. Will governance outcomes be better or worse when nobody wants to contradict the president’s dumb ideas? It does not seem, historically, that it’s a good idea to combine an ignorant leader with a team of sycophants.

11. It’s interesting how America appears in the eyes of our East Asian allies:

They know that China plays hardball with American firms; they accept the region is rife with industrial policy; they understand that Japan, South Korea and Taiwan have to pay a price for living under America’s security blanket. They are loyal soldiers defending the silicon island chain. . . .

What irks them, though, is the feeling that America is upsetting one of the last remaining bastions of globalisation not just for geopolitical reasons, but out of a selfish desire to preserve its economic dominance. One Japanese executive fumes that America is “childish” to try to stifle Chinese competition. A Taiwanese expert asks drily whether it would satisfy the “America First” contingent if TSMC simply changed its name to America Semiconductor Manufacturing Company. Quietly, many hope their firms will continue to straddle the geopolitical divide for years to come.

12. Bloomberg says that NIMBYIsm has come to the south:

The [Nashville] boom — driven by transplants from blue states like New York and California — has spurred a right-wing group that marries conservative religious beliefs with restrictive policies on growth into control of the local legislative body. At a planning board meeting in May, the pressing agenda item was whether to boost minimum lot sizes in rural areas to at least 2.3 acres; big enough to ward off housing developers who need more density.

Was Jesus a NIMBY?

13. Let’s end with a slightly more optimistic link:

Zhou Qiren is an unusual economist. A professor at Peking University, he spent ten years toiling in the countryside during China’s cultural revolution. “The same farmer”, he observed, “worked like two totally different persons on his private plots versus on collective land.” Unlike most economists, Mr Zhou still studies incentives and constraints from the ground up, starting not with abstract principles, but with concrete cases, often drawn from his travels around China and beyond. . . .

He is sceptical of state-owned enterprises, which he once compared to public passages crowded with private “sundries”. He also has doubts about the feasibility of national self-reliance. Prosperity, he has pointed out, is built on “coming and going” across borders.

It was, therefore, a surprise when Mr Zhou was invited to brief Xi Jinping, China’s ruler, at a symposium on May 23rd in Shandong, a coastal province.

Rare events are really common

In a recent Econlog post, I pointed out that the “inverted yield curve” predictor of recessions had failed this time around. (Recessions are supposed to occur within a year of the inversion.) Here I’ll discuss one reason why this sort of indicator is less useful than it might seem at first glance.

This tweet caught my eye:

That makes this seem like a very rare occurrence. And in a sense it is. But it’s also true that this sort of very rare occurrence is incredibly common. If you follow sports, you’ll see many similar tweets pointing out bizarre data points that don’t occur very often. It’s easy to do, as there are so many different ways to slice and dice the data in order to find odd patterns. Indeed, this very game featured another extremely weird fact, unrelated to the one cited above:

Luka and Kyrie 1-14 from 3. Mavs win by 38.

Someone should compute the number of times the two star players shoot so poorly from 3 and their team wins by 38!

I believe that people in fields like finance and economics are far too impressed by certain historical correlations. When you have a near infinite number of data points to consider, it’s not hard to find some truly unusual coincidences. Indeed, this fact probably underlies much of the distrust of the EMH. “Among America’s 330 million citizens, I spotted one person that made an unusually long string of successful investment decisions! A guy named Warren.”

Good for you.

PS. Many of the odd data points in basketball take the following form:

“First time in 26 years that a player had at least X points, Y rebounds and Z assists in 7 consecutive games. If that’s not enough, add steals and blocks to narrow the field even further. Or make it seven consecutive road games. Or make it “averaged” this many points, etc., over various time frames.

PPS. The simpler the statistic, the less likely it is due to data mining. Thus fans intuitively know that the best sports records involve a single data point for a single game (Wilt’s 100), or perhaps for a single career (Lebron’s scoring total.) Occam’s Razor for sports records.

A Frank appraisal of my blog

Tyler Cowen directed me to the blogger Daniel Frank, who has a post discussing my non-monetary blogging. I always find it gratifying when someone indicates that they find something of value in these non-monetary posts. I worry they are merely a self-indulgence, taking advantage of the fact that I have a captive audience from my market monetarist posts. And my Russia trolls keep telling me how stupid they are.

Frank appears to be a rather young blogger, and has some particularly interesting posts on the art of travel. Despite our vast age difference, we seem to share at least a few musical tastes (Radiohead, Sigur Ros, The Tallest Man on Earth, Daniel Romano, etc.)

In a postscript, Frank asks for help in identifying a few of my better posts. Please help him (me?) out.

I really need to get better organized . . .

. . . one of these days . . .

Donald and Hunter

It’s amazing how similar these two cases are. Both involve prosecutors going after people who committed minor technical violations, with the full force of the law. It’s likely that neither case would have been brought if the individuals had not been famous.

There is one big difference however. One guy is the top Republican, and the other guy is the top Democrat’s son. Therefore, among our totally irrational public there is almost zero overlap between those who sympathize with Donald and those who sympathize with Hunter.

It’s a stupid world, and we’re all forced to live in it.

PS. Reason says that roughly 20 million Americans are committing Hunter’s crime right now—right at this moment. Should they all be in prison? How much would it cost to build all those prisons? What would it do to the economy if you suddenly withdrew this many people from the workforce?

This is madness, but people don’t care because it doesn’t involve them.

PPS. Of course Donald should be in prison for other crimes, and perhaps the same is true of Hunter. (I haven’t followed his life as closely because . . . who cares?)

Read it and weep

1. Bad monetary policy produces inflation and/or recessions. But the greatest cost of bad monetary policy is that it leads to bad policies in other areas, including wasteful fiscal stimulus, protectionism, bank bailouts and price controls. In China, an overly restrictive monetary policy has led the government into a project involving the purchase of large quantities of homes. Here’s Bloomberg:

China is considering a proposal to have local governments across the country buy millions of unsold homes, people familiar with the matter said, in what would be one of its most ambitious attempts yet to salvage the beleaguered property market.

2. Freedom to travel is under threat:

Conservative legal groups are already drafting model legislation to prevent pregnant women from traveling for abortions by legally penalizing anyone who helps them, a strategy used by the state of Texas in one of its abortion bans, which allows anyone in the U.S. to sue those who assist women with abortions—and be rewarded with a bounty paid by the state.

3. Dani Rodrik has an interesting article on China’s program of subsidies for green technology:

China’s green industrial policies have been responsible for some of the most important wins to date against climate change. As Chinese producers expanded capacity and reaped the benefits of scale, the costs of renewable energy plummeted. In the space of a decade, prices fell by 80% for solar, 73% for offshore wind, 57% for onshore wind, and 80% for electric batteries. These gains underpin the creeping optimism in climate circles that we might just be able to keep global warming within reasonable bounds. Government incentives, private investment, and learning curves proved to be a very powerful combination indeed.

With the IRA, America already has its own version of China’s green industrial policies. The law provides hundreds of billions of dollars in subsidies to facilitate the transition to renewables and green industries. 

Who could possibly object to a highly successful program that is now being copied by the US government? You guessed it–the Biden administration:

On a recent trip to China, US Secretary of the Treasury Janet Yellen warned China directly that the US would not stand by in the face of China’s “large-scale government support” for industries such as solar, electric vehicles, and batteries.

4. Taiwan understands China far better than does the US government. It also has more to fear from the Chinese government. And yet, even Taiwan understands the futility of banning TikTok.

About 80 miles from China’s coast, Taiwan is particularly exposed to the possibility of TikTok’s being used as a source of geopolitical propaganda. Taiwan has been bombarded with digital disinformation for decades, much of it traced back to China.

But unlike Congress, the government in Taiwan is not contemplating legislation that could end in a ban of TikTok.

AFAIK, Russia does not own any major social media used in the US. And yet I see pro-Russian propaganda all over the internet. Tiktok is not the issue.

5. The Libertarian Party seems to have pulled back from the brink by choosing a respectable candidate over the sort of hard right figure preferred by the Mises Caucus. Here’s Reason:

Oliver, a 38-year-old gay man from Atlanta with socially tolerant and pro-immigration views, delivered a passionate response after Trump’s speech to the convention on Saturday. Now, he will get to spend the next six months competing directly against Trump and President Joe Biden, two men more than twice his age. After winning on Sunday, Oliver promised to keep pressing a message that neither major-party candidate is likely to offer.

“I will continue to bring a hopeful and positive message of liberty to both those who consider themselves libertarian and those who don’t know they are libertarian yet,” Oliver promised in his victory speech. . . .

Oliver’s victory on Sunday night was a blow to the Mises Caucus, the right-leaning faction that took control of the Libertarian Party at the 2022 convention and that had orchestrated Trump’s appearance at the convention. That faction’s preferred candidate was Rectenwald.

6. I’ve focused on arguments against Trump, but Matt Yglesias points out that it’s possible to construct some pretty creative pro-Trump arguments:

7. Martin Wolf has an excellent piece on the rising threat of nationalism. He concludes as follows:

In 1939, the poet WH Auden wrote of what he judged “a low dishonest decade”. How will ours look in 2029?

8. There’s no such thing as public opinion, example #329:

9. Back in the summer of 2021, I predicted that the public’s mood would sour even as the economy improved:

There’s always a price to pay for unsustainable good times, and thus I expect the public’s mood to turn sour in the fall and winter, even as employment recovers—indeed because employment recovers.  Someone has to do all those crappy jobs.

Now it’s becoming conventional wisdom:

Never forget that you heard it here first.

10. I am currently reading an old novel by Melville, entitled Omoo. This comment at the end of chapter 6 caught my eye:

But it is a curious fact, that the more ignorant and degraded men are, the more contemptuously they look upon those who they deem their inferiors.

Suppose you brought Melville to the year 2024, showed him each candidate’s speeches, and asked him who he thought would win the votes of “white trash”. What would he predict?

11. The funniest thing about this Youtube clip is that Trump forgot to lie. Normally he’d just lie, like when they asked him if he would release his taxes. In this case he was so freaked out by the name “Epstein” that he forgot to lie.

12. When Biden makes a patriotic speech on D-day extolling the virtues of democracy, Trumpistas whine that he’s being “political”. I guess that’s because in their view “everyone knows” that Trump hates democracy, so any discussion of its virtues is, ipso facto, a slap at Trump.

I’m going to have so much fun blogging during Trump’s second term!!