BRIEFLY NOTED: 2023-06-28 We

Haldane on the beneficial manufacturing-subsidy arms race; Chetty on social capital & economic mobility; Apple VisionOS SDK; & Yglesias, Milanovic, Koop, & Hart on "thriving", Dengism as one long...

Jun 29, 2023

MUST-READ; A Useful Industrial-Policy Manufacturing-Investment “Arms Race”?:

Quite possibly:

Andy Haldane: The global industrial arms race is just what we need: ‘Manufacturing is undergoing a revival around the world, sending several secular trends into reverse…. The past few years, however, have seen… three distinct global arms races. The first centres on green technologies and industries…. With an extra investment of around 2-3 per cent of global gross domestic product per year in green technologies needed to hit net zero, this race has a distance to run. These initiatives have drawn criticism on the grounds they amount to a subsidy race. But an arms race to invest in decarbonising technologies is in fact exactly what the world needs to tackle two global externalities—the climate crisis and the investment drought…. The second global arms race under way is remilitarisation. After a period of decline, heightened geopolitical tensions, amplified by the war in Ukraine, have caused governments globally to reinvest in defence… reigniting manufacturing in both east and west. Third… to re- or on-shore manufacturing…. motivated by the need for greater supply chain resilience in the wake of Covid-19, but also by a desire for local job re-creation…. These arms races are beginning to transform the contours of global policy and the global economy…. Public and private money is flooding into manufacturing projects, irrigating firms dehydrated by the investment drought…. Most arms races leave no one better off. Today’s race to reindustrialise is different. It may be just the impetus the world needs to break free of its economic and environmental torpor…

Andy Haldane could have put his argument more strongly, had he identified the externalities that the subsidy plans now ramping up would compensate for:

There is no market to pay for “insurance” against global value-chain disruption. The Covid-19 pandemic has shown us how vulnerable our global supply chains can be, and the need for greater resilience in the face of such disruptions. By investing in re- or on-shoring manufacturing, governments can help to mitigate the risks associated with global value-chain disruption.
Xi Jinping’s China looks scarily like pre-WWI Wilhelmine Imperial Germany in its desire to throw its weight around internationally to distract its citizens from the government’s domestic problems. This has led to heightened geopolitical tensions and makes proper the renewed focus on defense spending. Governments need to maintain the peace by greatly discouraging adventurist wars and rumors of war like that launched by Xi Jinping’s “no limits” partner, Vladimir Putin of Muscovy.
here are enormous positive technological externalities produced by the communities of engineering practice associated with manufacturing. By investing in manufacturing, governments can help to foster innovation and technological advancement, which can have far-reaching benefits for society as a whole.
4. There is the refusal of right-wing grifters to allow proper pollution pricing, especially in the case of global warming. This has led to a failure to adequately address the climate crisis and the need for urgent action to reduce greenhouse gas emissions. By investing in green technologies and industries, governments can help to drive the transition to a low-carbon economy and mitigate the worst impacts of climate change.

ONE VIDEO: Raj Chetty: Social Capital & Economic Mobility:

ONE IMAGE: Apple VisionOS Software Development Kit & Simulator: “Hello, world!”

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Very Briefly Noted:

Duncan Black: Regulation: ‘Tabarrok arguing that it's ridiculous to mandate that landlords provide… hot water…. Costs of obtaining information and writing contracts…. Having some bare minimum set of characteristics for an apartment takes all that off the table…. Cost of settling disputes…
Cheng Siwei & Denise Jia: Local Chinese Governments Add Billions to Multitrillion-Dollar Hidden-Debt Problem…
Robert Armstrong: Commercial real estate: contained, for now: ‘Transaction volumes are so depressed that it is hard to know… what buildings are worth…. Two recent Financial Times stories…. “One broker estimated that only the top 10 per cent of office buildings in New York were not distressed…”. “New York City’s largest office landlord has agreed to sell a stake in a prominent tower that gives [the building] a $2bn valuation, a modest markdown from its previous price…. SL Green will sell the 49.9 per cent stake in Manhattan’s 245 Park Avenue building to Japan’s Mori Trust “….
John Ganz: ‘Aris Roussinos has a very interesting piece on Russian fascist crackpot philosopher Aleksandr Dugin…. A bit of pussy footing around the f-word…. Asseverations that these figures that they are not fascist or Nazi, but something “more interesting” is just buying into and furthering their propaganda…
James Vincent: AI is killing the old web, and the new web struggles to be born: ‘Generative AI models… making it cheaper to generate lower-quality content…. Google… trying to kill the 10 blue links. Twitter is being abandoned to bots and blue ticks… the junkification of Amazon… the enshittification of TikTok…. A job posting looking for an “AI editor” expects “output of 200 to 250 articles per week”…
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¶s:

Clever:

Matthew Yglesias: Why it's harder for families to "thrive": ‘Blame relative price shifts, not wage stagnation…. Food prices from 1950s ads… bananas… in 1957… $2.98 adjusted for inflation… [today] Target… is selling them for $1.99…. Chickens… in 1950, or $5.56 [per pound] in today’s money… bone-in chicken thighs for $1.69 per pound…. Anew car in 1960 cost… about $27,000 in today’s money, just about what a new Camry… today… [including the] value… in the quality improvements… For $80 you can get a television with a bigger screen and better resolution than what RCA was selling for $400 [which is $4500 inflation-adjusted today.] The problem—and here’s where Cass’ framing about “thriving” is clever—is that… we think of a thriving family in 2023 as having a large house by the standards of 2023… [and] having only one car… is not exactly a sign of thriving in the contemporary United States…. The issue at hand… is that the price of family-related stuff has gone up, not relative to the absolute ability to pay but relative to the price of other stuff, and we’d need a mix of taxes and subsidies to even it back out…

Matt is 100% right: it is “family-related stuff” for those focused on giving their children every advantage they can that has become, relatively, much more expensive. Thus it is not that people cannot afford it. Rather, it is that those who make such investments feel great regret relative to others when they look at their childless or at their less-invested-in-the-semi-meritocracy peers. It is that that has made parents with children think that it is harder for families to “thrive” in the contemporary United States. Yglesias suggests a mix of taxes and subsidies to rebalance things in the interests of those who have and are extremely invested in the success of their children. But how strong is the political coalition behind such policies? We have not seen them yet. And we have seen employers have to walk a very delicate line as they try to balance the equities between their employees who are childless women, are women with (especially young) children, are childless men, and are dads.

I am not sure I agree here. If Dengism-Jiangism-Huism was a NEP, it was a VERY BIG NEP INDEED:

Branko Milanovic: State capitalism one hundred years ago and today: ‘Lenin… presents NEP as a necessary retreat from… socialism… to restore the links with the small-holding peasantry… [and] to learn how to manage the economy…. Communists.. [had] gained political power but… are utterly bureaucratic and thus they mismanage the economy…. He fails to recognize… that the problem was not just learning how to manage large enterprises but… incentives…. [So] the problem, Lenin believed, could be remedied by working alongside capitalists in the so-called mixed enterprises…. NEP is a learning experience; once Communist cadres have learned how to do business, and run the economy, NEP can be shut down…. [Lenin saw] state capitalism where the state is controlled by the Party and the proletariat, and allows capitalists to function in order to boost productivity and to learn management skills… [as] entirely different… from state capitalism under capitalism… very relevant for the understanding… the Chinese approach… today. As I have argued before, we can see the current Chinese state capitalism as a protracted NEP…. Lenin seems to overlook the possibility that with a very long NEP the economic and political power will gradually seep from under the Party and the very nature of the state would change. Those who have money will dictate things…. This happened under Jiang Zemin and Hu Jintao…. While the private sector was marginal among the elite (the top 5 percent) in 1988, twenty-five year later almost one-third of the people in the elite were private businessmen….If one includes professionals who are employed in the private sector, a bit over one-half of the elite is private-sector dependent. It is in this context that one can look at Xi Jinping’s policies: as an attempt at the reassertion of the power of the state vs. the capitalist sector and the rich…

I do not believe that Lenin overlooked the possibility that a prolonged period of state capitalism could lead to a shift in economic and political power away from the Party and towards those with money. Certainly his successors did not—the fear of the reign of the NEP-men and Stalin’s promises to get rid of them was one of the things at the root of Stalin’s seizure of absolute power at the end of the 1920s. The CCP has bureaucracy, assibayah, and ideology—a bankrupt ideology that is now nothing but vague egalitarian hopes. Can those be a durable source of social power when they are faced by a bourgeoisie strong and splendid in its wealth and with its productivity. No landed, no military aristocracy could maintain its power in post-Mediæval Europe, but they lacked bureaucracy and ideology. Could those make a difference?

I suppose that it is possible that a Leninist Party could maintain its dominance indefinitely through effective-enough management of the economy to keep economic growth going and through the use of modern info-com tech to spread propaganda and so maintain ideology. Perhaps such a Party could retain its legitimacy and continue to exercise control—or, at least, point at times of troubles elsewhere and hold the line with THERE IS NO ALTERNATIVE.

More likely, I think, is the risk that bureaucratic control will lead to economic stagnation. What is the incentive to become rich and raise productivity if it puts you under suspicion in the eyes of the Party and its Leader. And how much growth can a bureaucracy that serves the whims of an aging and increasingly detached-from-reality leader produce?

Milanovic suggests that Xi Jinping’s policies can be seen as an attempt to reassert the power of the party-state over the capitalist sector and the bourgeoisie. But I think that dominance is a dead end, that only marriage can maintain economic growth, and will the offspring of that marriage be anything that Xi Jinping and his barons can approve of?

Cruel! But it’s twue! It’s twue! It’s twue!:

Philip Koop: ‘I loved the Devereaux series, but I really had to admire his restraint. The potted summary of the "change and continuity argument" runs like this: "Did you know that when the Roman empire supposedly 'fell', the political state continued to function for centuries in the east, and that even in the west, many of the empire's inhabitants survived? Furthermore, they continued to speak the same language, practice the same religion, and maintain the same elite families. There was no sharp linguistic or cultural break." It's not so impressive when you put it like that, is it? It just reminds me so so much of the "punctuated evolution" debate, which has been justly forgotten now…

I think that if augmented reality is going to be a thing, it will be because Apple’s VisionOS succeeds massively. But I think that it is more likely than not that it will fail, and we will wind up in a world with scattered elements of semi-ambient computing around us, and with our personal assistants whispering in one of our ears rather than hugging our faces:

Andrew Hart: ‘I’ve just finished watching Apple’s visionOS sessions. Some of these concepts and the way Apple has implemented the design is mind blowing. Here are 5 examples that I loved: 1. Eye zoom. Just look at where on an image you want to zoom in, and pinch your fingers apart. 2. "You had me at scrolling"—the famous quip someone made to Steve Jobs when he demoed the iPhone. With visionOS, Apple uses your eyes and hands to control the entire interface in a new, intuitive way. 3. If your fingers control your mouse pointer, how do you easily move to the other side of the screen, without having to reach all the way across? Well this is how—look and tap. 4. Dynamic scale content, aka “screen scale”. This technique is used in video games, to make text legible even if its positioned really far away. The user can move windows closer or further away, and it still appears at exactly the size it was designed. 5. Can Apple make typing on a virtual keyboard a better experience than a physical one? Maybe? visionOS does support using a physical keyboard too, but the virtual keyboard is very well designed—raised keys, dynamic hover-highlighting to guide your finger, audio feedback…