Get happy!!

1. I frequently argue that the money/happiness correlations are misleading, that it is happiness causing prosperity. An expert on happiness now suggests that there is abundant evidence for that proposition:

Choosing to engage in practices like building strong social connections and finding a purpose that fuels you is what actually leads to happiness and fulfillment, not achieving a specific financial goal, Brooks emphasizes.

But being happier in life can lead to financial increases and success, Muller says. “Happiness is the thing that’s actually causing us to succeed,” she notes.

A 2005 systematic review of 225 papers found that being happy can lead to success in different areas of life including income and health.

2. The FT says markets don’t believe that China will invade Taiwan:

An invasion of Taiwan would severely disrupt global chip supply and also have an impact on China, which like the rest of the world relies heavily on TSMC for its supply of advanced chips. The country is TSMC’s third-largest revenue contributor by geography, accounting for nearly a tenth of TSMC’s sales.

A good measure of foreign investor anxiety — the premium that TSMC’s US-listed American depositary receipts trade at compared with the stock listed in Taiwan — suggests investors are becoming increasingly sanguine about geopolitical risks. These trade at more than a 20 per cent premium to local shares for the current quarter, the widest gap in more than a decade.

That sentiment is mirrored in Taiwan, where locally listed TSMC is the most bought stock by overseas investors. Nvidia has also added support by announcing plans to increase its investments in the island.

I’m not so sure about that. All I know is that if China does invade it will do so knowing full well that this makes it likely that it will lose the AI race to America.

3. During the late 20th century, airliners were much safer than cars. Nonetheless, you’d have a major accident every few years, often involving well over 100 deaths. In the 1990s, for example, well over a thousand people died in US air crashes. Ditto for the 1970s and 1980s. Since 9/11, the record of US airliners has become almost insanely good, with only 476 deaths over nearly 23 years. Most of those were in a December 2001 Airbus crash that killed 265, and almost all of the rest were in small commuter planes.

The star for recent US flight safety is Boeing, which has seen only about 10 US deaths since 9/11, only one of which (AFAIK) was due to mechanical problems. If someone in late 2001 had predicted this sort of Boeing safety record for the next 22 1/2 years, they would have been laughed out of the room. Why have Boeing airplanes become so astoundingly safe? Some of you know more about this than I do; please provide explanations in the comment section.

Bonus points to anyone who can explain why almost everyone disagrees with me, viewing Boeing airplanes as having a poor safety record. (Of course given my forecasting record, you can expect a Boeing crash any day now.)

BTW, anyone who says, “Yeah, US Boeing flights are super safe, but flying a Boeing plane in Ethiopia remains dangerous” will be banned for life.

4. In the future, everyone will be rich.

Even today, we drive cars that are far better than the Cadillacs and Mercedes of yesteryear. Ditto for our TVs and phones. I can get Asian food in a strip mall that’s better than an elegant NYC steakhouse of the 1950s. But what about big ass diamonds?

Have no fear. The price of really big diamonds is falling fast. For less than $1500, you can get a 3 carat diamond with pretty good cut, color and clarity, due to rapid progress in lab grown diamonds. (No, these are not cubic zirconia; they are real diamonds. Even experts cannot tell them from natural diamonds without a magnifying class.

5. Biden finally does something good:

To be eligible, the spouses must have lived in the United States for 10 years and been married to an American citizen as of June 17. They cannot have a criminal record. The benefits would also extend to the roughly 50,000 children of undocumented spouses who became stepchildren to American citizens.

Imagine you are a child that has grown up in America, does well in school, and doesn’t even remember the country in which you were born. Then at age 18 you are forced to return to live in what Trump calls a “shithole country”. Biden’s action is great news.

6. And the Senate just voted 88-2 to make it easier to build nuclear power plants.

7. When will AIs be able to do scientific research? It’s already begun!

8. Like Noam Chomsky (and Franco), Hong Kong is not dead yet.

PS. Why two exclamation points in the post title? Nostalgia for when I was young:

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?)