BRIEFLY NOTED: For 2023-07-08 Sa

Contra Yglesias, Bidenomics is more than just Keynesian full-employment; þe astonishing negative managerial competence of Elon Musk; Sal Khan wants to build Neal Stephenson's "Young Lady's...

Jul 08, 2023

MUST-READ: US Democrats’ Lessened Willingness to Enable Plutocrats & Republicans:

Matt Yglesias, I think, gets it wrong when he claims “Bidenomics” is merely “that the government should do everything in its power to make recessions brief and recoveries rapid”:

Matthew Yglesias: ‘Bidenomics’ Became a Doctrine by Accident: ‘The idea that the government should do everything in its power to make recessions brief and recoveries rapid sounds banal, but it’s a big difference from how policy was made in the first two decades of this century…. Biden’s [original] economic vision had three major pillars that have all since crumbled… [i] major investment in the “care economy”… [ii] a legacy-defining push to slash child poverty… Child Tax Credit…. [iii the] view that… fiscal discipline as such was not a major concern…. The first two… fell… due to narrow congressional majorities…. Build Back Better… transmogrified into the Inflation Reduction Act… the energy and health provisions… reworked to be a deficit reduction bill…. The… Fiscal Responsibility Act… likewise, a deficit reducer…. Many of us expected the pandemic to produce a similarly sluggish recovery…. Avoiding that outcome is genuinely worth celebrating. The inflation that was induced by being so insistent about it was genuinely troubling, but the fact that inflation has now diminished significantly without a recession is important. America’s year of soaring prices won’t leave scars on people’s lives the way mass unemployment does…. The tight labor market is paying dividends in terms of diminished inequality and rising job satisfaction….

The thing about the Clinton and Obama administrations was that all other priorities had to take a second place to deficit reduction. The thing about Biden’s IRA and FRA (and CHIPS) is that the “deficit reduction” pieces are small add-ons required as crucial logrolling items, rather than the centerpieces.

Thus fiscal discipline as such is not a central concern for the Democratic coalition as a whole, because all except for a few (often crucial) edge-case actors recognize that Democratic moves toward fiscal responsibility are then undone by Republicans who use up whatever fiscal running-room there is—and more—for another round of tax cuts for the rich:

Give me full employment, a competitive exchange rate, and proper funding by the government of infrastructure and technical education, and you have done 90% of the good that I think optimal industrial policy could do. Give me a large push to make gaining education, technical, and apprenticeship-like skills easy, and I think you have taken care of a bunch of our maldistribution concerns as well.

There is another key difference, I think, between the Biden administration, and the democratic administrations that came before. Bill Clinton is very charismatic: able to convince anyone—especially himself—of whatever is convenient at the. What do you wanted to convince everyone, including himself, in the moment. And during the year 1996 what he wanted to convince everyone was that his presidency so far, throughout his first term, had been a great success, and that everything had gone according to plan. Then you could argue that he should be given another term to continue: change horses in midstream, when the horses are doing very well.

The price of that was forgetting that while the 1992 Bill Clinton was a "new Democrat", he was one only in the sense that he was a New Deal-Social Democratic wolf in Left-Neoliberal sheep's clothing.

After 1996, however, Clinton had convinced himself that he had always been a Left Neoliberal, just one who made friendly noises to the Social Democrats and the New Deal Liberal holdovers—a guy who felt their pain.

Biden’s administration has not (yet?) committed that act of self-hypnosis, and convinced itself that everything has gone 100% according to what THE REAL PLAN ALWAYS WAS…

ONE IMAGE: Twitter vs. Threads:

The success (so far) of Tesla and SpaceX becomes more and more of a mystery with every passing day:

Share Brad DeLong's Grasping Reality

ONE VIDEO: Sal Khan: How AI Could Save (Not Destroy) Education:

Young Lady’s Illustrated Primer from Neal Stephenson’s The Diamond Age, here we come!

Very Briefly Noted:

Will Mathis & Aaron Clark: Earth Keeps Breaking Temperature Records Due to Global Warming: ‘On Monday, the global average temperature was the highest it’s ever been. It was even hotter on Tuesday…
Ben Winnick: Odysseus Shot First: ‘I believe that certain passages of Homer’s Odyssey were similarly composed to assure its audiences that the victims of Odysseus’ rampage in book 22 deserved their gruesome deaths. These passages counteract earlier traditions, in which Odysseus’ actions were less justified…
Greg Clark: The inheritance of social status: England, 1600 to 2022…
Pablo Triana: Buffett’s derivatives bonanza doesn’t prove that Taleb is wrong: An autopsy of Berkshire’s big derivatives portfolio trade…
Maia Mindel: The Monocrisis: ‘It's housing, stupid…
Kate Wagner: Lessons From the Catastrophic Failure of the Metaverse…
James Ball: The slow, sad death of Twitter: ‘Twitter was a chaotically managed company… close to breaking even… [with] the overwhelming majority of this revenue was from advertising…
Mark Davies: What to Watch: ‘AI stocks are likely in a bubble but investors should still “probably own some,” according to Anthony Scaramucci…. Nvidia may be overvalued now, but… hold on for the next 15 years. Fewer ASML chipmaking machines will make it to China…. China’s economic woes are multiplying and Xi Jinping has no easy fix…
Auros: ‘Re: “maybe there are AR uses for allowing us to grok the world around us”. I was pretty disappointed that Google Glass never really got traction. I want a device that can see the faces of people at a party, and annotate the ones who are in my contacts book, to let me know who they are and how I know them…
Baldur Bjarnason: The LLMentalist Effect: How chat-based Large Language Models replicate the mechanisms of a psychic’s con…

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Jan Hatzius and company have a very good track record as far as current analysis is concerned:

Jan Hatzius & al.: The Case for Declining Core Inflation: ‘The FOMC now projects the core PCE measure to end the year at nearly double its 2% target. However, we see four reasons to expect renewed declines…. Looking ahead, the three strongest predictors of used car prices—new vehicle inventories, new vehicle incentives, and the new-versus-used price differential—all point to significant declines. Used car auction prices have already pulled back 9%, and our model suggests another 9% drop this summer and fall….. Residual seasonality…. both the CPI and PCE seasonal factors are spuriously fitting to the sharp in rebound in travel and transportation categories in mid-2020…. We also continue to expect a further decline in shelter inflation…. Cleveland Fed research and our own analysis using alternative rent data reveal that at least half of the post-pandemic premium on new rental units has unwound…. The final reason…significant progress on labor market rebalancing. Our jobs-workers gap has roughly halved, and sequential growth in average hourly earnings has already slowed to the 4% pace we believe is necessary to bring medium-term inflation back into the Fed’s comfort zone…. We are lowering our December 2023 core PCE inflation forecast by two tenths to 3.5% year-on-year, and we are now assuming a sizable slowdown in June for both core CPI (0.24% vs. 0.44% in May, mom sa) and core PCE (0.21% vs. 0.31%)...

The old WTO was based on the idea that “no subsidies” and “national treatment” were sensible baselines, relative to which penalties to discourage violations could be technocratically applied. But that ship has not only sailed, it has left the hemisphere:

Alan Beattie: De-risking trade with China is intrinsically political: ‘It’s absurd to suggest that companies alone can manage economic relations between Beijing and the west…. The European business-government nexus has shown a woeful lack of foresight in shifting towards EVs. German car manufacturers and their friends in government… trying to extend… conventional engines… failing to clamp down on the faking of emissions tests…. For all Scholz’s talk of a clear division between government and business, the idea of a company like VW making decisions divorced from official influence is absurd…. Some sectors will always come under more government influence than others, but companies operating in an increasingly politicised environment need sharper awareness of the potential for official interference. Taking EVs as an example, the extent of interference remains uncertain, while companies’ own reactions to technological and market developments have been dilatory and reactive. De-risking trade with China has to proceed from a realistic appraisal of what governments can and should be doing, not promulgating the illusion that they have no role to play at all…

That depends on what the long-run discount rate applied to Apple is, doesn’t it? The ten-year US Treasury TIPS is currently 1.7%—less than the real growth rate of the world economy. And there is a future in which spatial computing becomes a serious thing, and it looks to me like Apple and TSMC are each half of an entity that has a ten-year lead in the retina-class passthrough you will need to do spatial computing for a long time to come. The iPhone and the cash are the solid chunks of value, but the VisionOS potential is an upper tail:

Mark Gurman: Apple’s Near-$3 Trillion Valuation Isn’t About the Vision Pro Headset: ‘Apple’s ever-expanding ecosystem…. Tim Cook[‘s] dream… spend [your] days on an iPhone, iPad, Mac, Apple Watch and, one day, Vision Pro,.. iCloud and Apple Music… streaming Apple TV+… an Apple TV box…. CarPlay, savings accounts, the Apple Card credit card, health tracking and iMessage—plus a flood of apps and other content—it becomes very hard for consumers to leave…. People are also addicted to their iPhones and other Apple products, and they’re paying increasingly higher prices for them…

Seven years old, and truer than ever. Perhaps the most decisive of Maciej’s many decisive arguments is the one from Slavic Pessimism:

Maciej Ceglowski (2016): Superintelligence: The Idea That Eats Smart People: ‘Nick Bostrom imagines… “Nanofactories producing nerve gas or target-seeking mosquito-like missiles might burgeon forth simultaneously from every square meter of the globe. And that will be the end of humanity…”. The Argument From Stephen Hawking's Cat… say he wants to get his cat into the cat carrier.… The Argument From Einstein's Cat…[a] stronger version…. The Argument From Emus…. The emus responded by adopting basic guerrilla tactics…. The Argument From Slavic Pessimism…. The Argument From Complex Motivations…. The Argument From Actual AI: When we look at where AI is actually succeeding, it's not in complex, recursively self-improving algorithms…. The Argument From My Roommate… From Childhood… From Gilligan's Island… From Brain Surgery…. The Outside Argument: What kind of person does sincerely believing this stuff turn you into? The answer is not pretty…. Grandiosity…. Megalomania…. Transhuman Voodoo…. Religion 2.0…. Comic Book Ethics…. Simulation Fever…. Data Hunger…. String Theory For Programmers…. Incentivizing Crazy…. AI Cosplay…. There is a quote I love to cite: “If everybody contemplates the infinite instead of fixing the drains, many of us will die of cholera.”—John Rich…. The pressing ethical questions in machine learning are not about machines becoming self-aware and taking over the world, but about how people can exploit other people, or through carelessness introduce immoral behavior into automated systems…