BRIEFLY NOTED: For 2023-09-30 Sa
Thomas Hirst on center-right politicians worshipping at cold altars; dueling estimates of the "neutral" interest rate r*; BPEA conference day 1; very briefly noted; & Matranga laments how teaching...
Thomas Hirst on center-right politicians worshipping at cold altars; dueling estimates of the "neutral" interest rate r*; BPEA conference day 1; very briefly noted; & Matranga laments how teaching micro is hard, Muthukrishna on GPT-LLM-ML's enabling flipping the classroom, Levine on Tether, journamalistic malpractice on Trump's visit to Michigan, Krugman on r*, & on the glidepath to a soft inflation landing, guesstimating agrarian-age living standards, & briefly noted...
MUST-READ: Less-Unreasonable Conservatives Bewildered & Confused:
What do the less-unreasonable “conservatives” believe these days?
The sharp Tomas Hirst considers Rory Stewart and Mitt Romney:
Tomas Hirst: ‘Strongly recommend listening… [along] with the excerpt from Romney’s biography…. Both Stewart and Romney fell out with the parties they felt/feel deeply emotionally and intellectually associated with…. They both try on versions of “it was better to try to save the project from within the tent than be a powerless external critic” even where the risk was clearly going to be one of looking complicit…. A certain naivety… we’re invited to find charming…. But… they entirely misread the moment… question their judgement… still interesting to get a sense of what they saw from the inside, & difficulties reconciling notions of personal ambition, public service and party loyalty.
Rory struggling to articulate… [“]Conservative[”] is telling IMO—ends up at landscapes & small farmers…. You get the sense that *even they* have concluded that the low tax/small state pitch is largely an intellectual dead-end…. Populists… spotted zero-sum dynamics of the 2010s, driven in large part by woeful policy response to financial crisis, as an opportunity to grow & entrench a rabid form of partisanship…. The right tried first to absorb… before being swallowed…. Centrists believed that the same party structures that drove them to hold the line despite obvious failings of those populists would ultimately restrain their worst impulses. But feature of cults of personality mean they work around party/institutional structures…. There’s still not enough reckoning with how their approach facilitated the degradation…
I was having lunch with the highly estimable Jim Hines a couple of weeks ago, and we were commiserating about how we had thought we had understood American politics policy, when we were young, but no longer did.
Back when we were young, when the Democrats held a majority of the Senate, the Senate Finance Chair would be Lloyd Bentsen and the Senate Foreign-Relations Chair would be Claiborne Pell; while when Republicans held a majority of the Senate the Senate Finance Chair would be Bob Dole and the Senate Foreign-Relations Chair would be Richard Lugar. Each would build a strong majority on his committee from the center out for what he thought should be done in the way of serious policy. and then each would call for bids from those, and those to the Rite, as to who would be the first to get on the legislative train and return for crafting the bill more to their liking. Then the Senate, because of its assibayah, would hold the line in negotiations with the House and ultimately the Senate version of the bill would emerge from the Committee of Conference and become law. Presidents were not quite errand boys for for major Senate committee chairs. But there was very much a sense that cabinet members had two bosses—and that the one on Capitol Hill was most important for a cabinet member who wanted legislation affecting their Department to actually move.
The underlying framework of the center of the Senate started from the premise that the United States was a nation of immigrants and their descendants. It was by far the most powerful global democracy. It has a very successful market-heavy mixed economy. But we also had serious problems we needed to solve, and powerful opportunities the government could help the rest of society grasp.
Opportunity, security, and shared prosperity: those were the watchwords. How far could government spending be pushed before the bureaucratization of society and the drag of marginal tax rates on enterprise wound up doing more harm than good? How much and what kind of income support and skills-acquisition support would generate the maximum feasible amount of opportunity for America’s poor and working class? To what degree were America’s rich the government’s partners in economic development whose enterprises were to be upported and themselves to be further enriched? And to what degree was their wealth a resource that the government should tap? All those were largely technocratic questions that had largely empirical answers given that the bipartisan American center started from not the same but similar places in terms of their views of how the world worked and their possession of nearby if not identical values.
Now the centrists could still do it. If Romney, Murkowski, Collins, Burr, Portman, Alexander, Lee, Capito, Sinema, Manchin, Tester, Kelly, King, Carper, Bennet, and Coons were to organize themselves and stick together, they could drive policy. And while their differences among themselves are considerably bigger than the differences between a Bentsen and a Dole or a Lugar and a Pell, they can talk to each other, and their staffs can actually assess evidence about how the world works.
But that is not what we get. When I talk to them, or to people who talk to them, I get a number of answers":
We have to spend too much time fund-raising and donor ego-stroking, and so have to outsource policy to a Majority Leader whom the rightists (or the leftists) will be happy with.
Elections have been nationalized, and so our chances of a majority require that we fall in line because our caucus has to be seen as effective.
Donald Trump is a chaos monkey, and only those with secure local bases—which is almost none of us—dare cross him significantly or we will be primaried and lose our seats.
But, increasingly, my sense is that Tomas Hirst has put his finger on it: The “low tax/small state pitch is largely an intellectual dead-end”, so they have nothing to be for other than “landscapes & small farmers”—and that quickly turns into the “zero-sum dynamics of… a rabid form of partisanship” run by unconstrained-by-norms “cults of personality… [that] work around party/institutional structures”.
ONE IMAGE: Dueling Estimates of the “Neutral” Interest Rate r*:
& Paul Krugman writes:
Paul Krugman: Is there really a reason for interest rates to stay high?: ‘The bond market has… been voting that Richmond is right and New York is wrong. But why?... Mainly, as far as I can tell, investors are looking at the economy’s resilience in the face of Fed rate hikes and concluding that this must mean that r-star has risen…. This might be true. Or the economy’s resilience so far may reflect lags in the effect of monetary policy or other factors that won’t persist. My instinct is to say… high interest rates, like high inflation, will be transitory. But as I said, that’s what I’d like to believe, so maybe you shouldn’t trust me here…
maybe you shouldn’t trust me here…
Attempts to explain a rise in r* via permanent shifts in the flow-of-funds through investment finance seem to me to get nowhere. The only live possibility is that we have finally managed to satisfy the demand for safe assets, and so have alleviated the world’s safe-asset shortage. But since the sources of that shortage were never clear to me, I cannot evaluate this argument.
ONE VIDEO: BPEA Conference Day 1:
Very Briefly Noted:
Economics: Jonnelle Marte: Fed’s New Inflation Outlook Already Seems Outdated, Analysts Say: ‘Latest projections imply substantial pickup in months ahead. ‘Fed is unlikely to hike’ again in 2023: Renaissance’s Dutta…
Jonnelle Marte: Fed’s Williams Suggests Rate Hikes May Already Be Finished: ‘“My current assessment is that we are at, or near, the peak level of the target range for the federal funds rate,” Williams said Friday in remarks prepared…
Global Warming: Noah Smith: The traditional auto industry is doomed: ‘A new one will take its place, but it'll look very different…. All of the arguments against the dominance of electric vehicles… are just wrong…. For the traditional unionized Big Three workforce making internal combustion cars around Detroit, the shift to EVs will probably sound the final death knell…
CogSci: Patrick Marren: ‘I’m with Frank Knight on this: “In general the future situation in relation to which we act depends upon the behavior of an indefinitely large number of objects…. It is only in very special and crucial cases that anything like a mathematical (exhaustive and quantitative) study can be made.” The latter, rarer type gets all the ink, but the former tends to be the more strategic stuff. Yet Bayesianism is far too often applied to both. In short, I do not question Nate Silver's bona fides (and I DO question that of his harsher critics); but I do question his usefulness in serious matters…
Human Capital: Timothy Burke: Academia: Here's What I'm Against: The Ruinous Addiction to Undermotivated Change: ‘Faculties tense up when presidents, provosts, vice-presidents and board members assail them with demands for change. Because they know that all of those people have a prior belief in change for change’s sake, an incentive structure that doubles as a religious conviction—and yet few of them will say with any degree of confidence or specificity what exactly it is that they think needs to be changed and what the consequences are of failing to do so…
Cybergrifting: Tristan Snell: ‘The CEO of Twitter doesn’t have Twitter on her iPhone main home screen…
Patrick McKenzie: A review of Number Go Up, on crypto shenanigans: ‘Zeke gets absolutely nothing useful out of van der Welde. He is conscious of this and announces it to the reader. But he gets great narrative texture to cover chapters recounting months of patiently following the Tether saga.
And it must be said, Zeke is far-and-away the best mainstream reporter on the Tether beat, which is institutionally treated as a boring Internet backwater…
Dave Karpf: Elon Musk and the Infinite Rebuy: ‘[Walter Isaacson] doesn’t understand poker well enough to recognize Musk as the grandstanding sucker…. So he portrays Musk’s complete lack of impulse control as a brilliant, identity-defining strategic ploy. (If you go all-in and lose six times, then go all-in a seventh time and win, then you’re still down five buy-ins)…
Kara Swisher: ‘Yoel Roth, interviewed by me, and Linda Yaccarino, interviewed by Julia Boorstin…. Once you hear the actual conversations you will grok that the real issue is a CEO who could not handle gentle criticisms about her obvious boss from a man who could be a lot harder on Twitter/X…
Neofascism: Patrick Marren: ‘A democratic republic must rely on neighbors meeting over the fence…. But now we are no longer neighbors. We don't live where they live. The people meeting over back fences are spinning each other up with Fox News/OAN/NewsMax blood libels…
NOTES & Substack Posts:
Economics Watch: How about Rakesh V. Vohra: Prices and Quantities: Fundamentals of Microeconomics <amazon.com/dp/B0845PMRRL>? Starts with the monopoly profit-maximizing firm's problem, and then adds more suppliers?:
Human Capital Watch: Successfully "flipping the classroom" in this way requires a really good set of group-doable sufficiently challenging in-class exercises. Those are very hard to create. But educators may well not have a choice in our brave new GPT=LLM-ML world:
Cybergrifting Watch: The big question thus appears to be: Is Tether spending more than three cents on every dollar “deposited” in expected loan subsidies that it will not get back in order to keep the crypto ecosystem “healthy”? If it is not, it should be fine. If it is, it is insolvent, and just waiting for the Wile E. Coyote moment. plus there is the question of just how much money Tether’s proprietors have tunneled out, and to where:
Neofascism Watch: Expect just as much political journalistic malpractice, malfeasance, and misinformation coming down the pike from The New York Times, The Washington Post, & company in 2024 as we saw in 2016:
I am going out on a limb here, but I think Noah Smith is mistaken in his belief that the change from ICE to E power cars with change the auto industry and make it another Rust Belt casualty.
Firstly, autos are already manufactured outside of Detroit in the Sunbelt states to undermine unions. That process has already started to take away union wage setting power. Nothing new there.
What does changing the powerplant do? It makes cars simpler and ultimately less costly to maintain. But cars are not engines, transmissions, and a fuel tank with a body, but rather a body with some sort of powerplant. There is an industry converting classic cars to become EVs, so clearly, despite the claims of some "petrol heads" the body, not the powerplant is more important.
Will more electronics and software shift production to places where this is the central expertise? I ws tried in Silicon Valley - twice - and failed. So I don't think so.
Will the battery be the issue? Maybe, although it will eventually become a cheaper, standardized, commodity item, just like other parts of the car.
AFAICS, the main EV threat comes from foreign suppliers like China. This is no different than the Japanese (and German) small car threat during the 1970s when high gas prices and poor manufacturing quality of US manufacturers undermined the market for large saloon cars. But as we know, the once almighty GM is now a shadow of its former self. So what is new and due to factors that have nothing to do with EVs?
A bigger picture is what technology changes have fundamentally changed other industries? Computers? Doesn't look like it. Chips in consumer appliances? Again, I don't see much change in suppliers other than the existing shift to offshoring and manufacturing in China, the same drivers that has impacted the garment industry that has not had a fundamental technology change.
In summary, the US auto industry may well change, but the changes have almost nothing to do with the phase out of ICEs and changing autos to EVs.
I'm not entire sure that African-Americans experienced in both life in the United States and US politics would have agreed with the young pre-Professor DeLong's understanding of how the US political system worked. Which leads in today's politics to the need to acknowledge that 40% of the US population considers people with black skins to be deeply inferior to white people and, when such gain any amount of economic or political power, to hate them with the fury of 1000 suns. And perhaps the US has been that way since 1607.