BRIEFLY NOTED: For 2023-12-13 We

Market economies lack sufficient information-transmission bandwidth (& so does everything else); Turchin & Nefedov on decline and fall; Yglesias on moderate Democrats wandering in the wilderness...

Dec 13, 2023

SubStack NOTES:

Economics: The debate over capitalism vs. socialism—decentralized market vs. central planning—was indeed won in the 1920s by the capitalist side, plus Pigou: the market solved the twin problems of information transfer and utilization and incentivization in a way that central-planning simply could not. Thus rather than central-plan everything, you only needed to impose Pigovian taxes and subsidies to correct for externalities, maintain competition, ensure proper aggregate demand, and tweak the distribution of income, and all would be for the best in the best of all possible worlds. Central planning could be relegated to wartime and rapid-development cases in which the overwhelming need was for immediate resource mobilization. But even if the mercenary market institution is—if it can be properly tweaked—better than central command or bureaucracy, is it good enough? We economists should be thinking much more about building alternative institutions with, as Dan Davies says, “higher bandwidth”:

Dan Davies: The Lawson Doctrine <http://backofmind.substack.com/p/the-lawson-doctrine>: ‘Where did it all go wrong? Lots of places, of course, in different ways and at different times. But the British economy, in the period from about 1986 to 1992 is on my mind…. The “ Lawson Doctrine ”… that current account deficits… are only a problem if they are accompanied by public sector budget deficits. If they aren’t, then they must have arisen as a result of private sector firms’ and households’ investment and spending decisions, and consequently they are likely to be, to use the phrase of the time “benign and self-correcting”…. If the market worked, the Lawson Doctrine would have worked. The point of the Hayekian economy as information processor is that whenever a private sector transaction happens, information is transmitted through the supply and demand mechanism, and then incorporated into the price mechanism…. The Lawson Doctrine failed because the globalised trade and capital markets of the 1980s were not able to transmit enough information at a fast enough rate. Using the word in its strictest sense—the one which your internet service provider uses in its advertisements—it didn’t have enough bandwidth…

Economic History: Is it in fact the case that once an agrarian civilization starts to lose resources, it is headed for collapse or near-collapse? It is certainly true that something must make the élite accept life on a reduced total resource base—either conquest and wholesale élite turnover, major winnowing via civil war, purges, or gatekeeping accession to élite status—and that all such methods impose further burdens. But, at least as I read it, “fall” proper is confined to the end of the Bronze Age, the Maya, and to the Roman provinces of Britain, Germany, Gaul, and (perhaps) Spain. Decline is common. Fall not:

Peter Turchin & Sergey A. Nefedov: Secular Cycles <https://press.princeton.edu/books/hardcover/9780691136967/secular-cycles>: ‘A gentlemen living on £10–20 a year who was employing only three servants and lived in one house, and whose meals were devoid of much luxury in terms of wine and spices, had little room to maneuver when his income plunged by up to 50 percent in the mid-fifteenth century: “They must have cut back, or even cut out completely, their occasional wine-bibbings, and avoided travel whenever possible, but too many economies of this kind might force them to drop out of the aristocracy and accept yeoman status” (Dyer 1989:108). In summary, a number of social mechanisms exist by which elite surpluses can be reduced: (1) deaths resulting from civil war, (2) deliberate purges of elites by new rulers, (3) limitations imposed on heir production... [Turchin, Peter, and Sergey A. Nefedov. 2009. Secular Cycles. Princeton: Princeton University Press. <https://press.princeton.edu/books/hardcover/9780691136967/secular-cycles>.]

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Public Reason: Matt Yglesias sets out his theory of the world. What do I think? I think he says a lot that makes a good deal of sense, but that his underlying belief that moderate Democrats need to do something to get back into the driver’s seat is awry.

As I say: it is not our turn to lead. It will not be our turn to lead until we have negotiating partners with powerful political and policy mojo near us on the right. We do not. To our right, is first, rubble; second, more rubble; third, more rubble; and then, fourth, pluto-kleptocracy; and, beyond that, neofascism.

Thus the attitude of moderate Democrats to the Left should not be to say “no”—the system as a whole says that. It is to let the Left run with the baton, but try to make a path so that when circumstances allow Left proposals can actually be enacted and then cemented into America’s institutions:

Matt Yglesias: ‘The fourth year of Slow Boring, a good time to take stock of both the trajectory of the site and the broader political circumstances…. I’m truly grateful…. Thank you all. The basic political problem: Slow Boring has prospered, but I think that only underscores the need for more complex forms of institution-building. Because while I absolutely, 100 percent believe in the importance of takes in shaping the world of political possibilities, it’s also clear to me that certain things can only be achieved by something more tangible than columns…. [1] Donald Trump is a corrupt, authoritarian menace… whose fundamental lack of shame or principle risks inflicting massive long-term damage on the country. [2] The Democratic Party… does not have a realistic plan for winning senate majorities and governing…. [3] America’s blue states are wealthy and in some ways prospering… [but] are not systematically delivering the progressive goods in terms of more egalitarian economies and better public services…. Public opinion and public policy has generally shifted to the left… on balance… very much… change for the better. But… the… institutions that used to anchor the moderate wing of the Democratic Party has largely collapsed… [after making] very bad bet[s] on the invasion of Iraq and then stuck with fiscal austerity…. On one level, that was just deserts. But on another level, it’s been a catastrophe…. The moderate side of the party has largely lost the capacity to be proactive and constructive rather than just saying “no” to a subset of agenda items elevated by the left…. Someone who’d like to run for state legislature in an R+4 seat can’t affiliate herself with a broadly recognizable moderate Dem brand identity. I worry in particular about the incentives facing longshot candidates…

ONE IMAGE: Physical Fitness Training:

Taylor Swift performs in East Rutherford, New Jersey, in May 2023

“Taylor Swift…revealed how she had prepared for her Eras tour. “Every day I would run on the treadmill, singing the entire set list out loud. Fast for fast songs, and a jog or a fast walk for slow songs. Then I had three months of dance training, because I wanted to get it in my bones…”

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ONE VIDEO: King Phillip’s War:

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Very Briefly Noted:

Economics: Sam Unsted: Bond rally <https://www.bloomberg.com/news/newsletters/2023-11-30/five-things-you-need-to-know-to-start-your-day>: ‘The narrative that the Fed is done with hiking rates and that inflation is slowing has fueled the strongest month for bond markets since the 1980s. Treasuries, agency and mortgage debt have all rallied, providing a boost to bond investors who have been bracing themselves for a third year of losses…
Tim Duy: Fed Watch: ‘Core CPI inflation came in as expected at 0.3% for November…. If, as seems reasonable, the next two core-PCE inflation readings average 0.15%…. By January, it is very possible, if not very likely, that inflation would have been effectively at target in six of the past seven months. That means: There is no “hard last mile” to return to 2% inflation. Inflation is already at 2% and has been since June. Real policy rates assuming a 2% year-ahead inflation forecast will still be above 3% by January…. I can’t see how in private the Fed doves aren’t already pounding the table to begin normalizing policy rates…
Claudia Goldin & al. (200^): The Homecoming of American College Women: The Reversal of the College Gender Gap <https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.20.4.133>: ‘One source of the persistent female advantage in K–12 school performance and the new female lead in college attainment is the higher incidence of behavioral problems (or lower level of noncognitive skills) among boys. Boys have a much higher incidence than do girls of school disciplinary and behavior problems, and spend far fewer hours doing homework (Jacob, 2002). Controlling for these noncognitive behavioral factors can explain virtually the entire female advantage in college attendance for the high school graduating class of 1992, after adjusting for family background, test scores, and high school achievement…. The source of boys’ higher incidence of behavioral problems is an area of active research and could be due to their later maturation as well as their higher rates of impatience (Silverman, 2003). Women are now the majority of undergraduates and those receiving a bachelor’s degree…
Central Country: You Xianying: The ‘new three’: How China came to lead solar cell, lithium battery and EV manufacturing <https://chinadialogue.net/en/business/new-three-china-solar-cell-lithium-battery-ev/>: ‘Government support, economies of scale and constant innovation have helped propel China in key transition industries…. China accounts for more than 80% of the global solar cell exports, more than 50% of lithium-ion batteries and more than 20% of electric vehicles.
The main propellers behind the surging trio are consistent government support, an early start, strong and low-cost domestic supply chains, and a massive home market driving economies of scale… [plus] Chinese companies’ ability to continuously [process] innovate…
Public Reason: Seth Masket: Let’s not ignore the real reason Democrats struggle with white working class voters <https://www.msnbc.com/opinion/msnbc-opinion/working-class-voters-biden-democrats-rcna128556>: ‘Nixon…commissioned several studies that found that working class voters had significant economic anxiety… and resentment toward people of color and educated protesters. Nixon… ignored the first… leaned in hard on the second…. Democrats are still the party of poorer people, most people of color and, increasingly, college-educated whites, while the Republicans are the party, somewhat paradoxically, of white people without college education and white people who are wealthy. And in an era where presidential elections are won by just a few tens of thousands of votes across a handful of swing states, it doesn’t take much shifting to make all the difference in the world. That’s why Trump and Biden were in the swing state of Michigan. Each is trying to convince working class voters there that he’s on their side…
Alex Tolley: Comment <https://braddelong.substack.com/p/successful-future-humanities-programs/comment/44498705?r=d0v>: ‘C P Snow… expressed concern…in his 1959 lecture "The Two Cultures and the Scientific Revolution"…. 60+ years later, science has made huge strides forward, yet we pick our leaders from the humanities, whose ignorance of basic science is not just appalling, but in the US and UK, often worn as a badge of honor…. I don't think we need to have a strictly technocratic governance, but we really need better informed governance to successfully navigate our increasingly technological and complex world…
GPT-LLM-ML: Alberto Romero: ‘People are calling out the “fake” Gemini <https://substack.com/@thealgorithmicbridge/note/c-45043263> demo that Google put out on Wednesday…. Google had artificially altered the interaction with Gemini, which had actually been static, over images and text, and with more convoluted prompt techniques that were “shortened for brevity.” People called it deceptive, misleading, and disingenuous. They ended up criticizing not just Google but also Gemini because it can’t really do what it was shown in the video. But the truth is, benchmark-wise, it’s still the best AI model in the world...
June Yoon: AI chip contenders face daunting ‘moats’ <https://www.ft.com/content/89745f19-1968-4c46-aaf2-5c6a6a50067f>:
‘Barriers to entry in an industry dominated by TSMC and Nvidia are very high…. Painfully long lead times for new entrants, which is especially perilous in a rapidly evolving industry. At the same time, Nvidia and TSMC’s fat margins mean more cash for research and development, accelerating the pace of next-generation technology releases. The latter spends more than $30bn in capital expenditure each year. With momentum in their favour, the gap between Nvidia and TSMC and their competitors has been widening over the past year…
Grifters, Cyber & Otherwise: Ezra Klein: ‘My thinking right now is very similar to Derek's. This is just an annus horribilis for effective altruism. EA ended up with two big swings here. One of the richest people in the world. Control of the board of the most important AI company in the world. Both ended in catastrophe. EA prides itself on consequentialist thinking but when its adherents wield real power it's ending in disaster. The movement really needs to wonder why…
Science Fiction: MurderBot: ‘This place was creepy <https://www.amazon.com/dp/B075DGHHQL>. I reminded myself that the terrible thing that had most likely happened here was me. Somehow that didn’t help…