In þe Generations After 1870, All Þt Is Solid Does Melt into Air, &
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In þe Generations After 1870, All Þt Is Solid Does Melt into Air, &
BRIEFLY NOTED: For 2022-06-11 Sa
FIRST: In the Generations After 1870, All That Is Solid Does Melt into Air
A very, very nicely put thumbnail summary of what I have been trying to say about the implications of the coming after 1870 of what Simon Kuznets named “Modern Economic Growth”. It destabilized politics and political economy around the globe. Shaky regimes crashed. Solid regimes became shaky. And rock-solid regimes began to feel earthquakes building:
Dominic Lieven: The End of Tsarist Russia: The March to World War I & Revolution: ‘Although the Russian case is unique, in this respect too international comparisons are nevertheless very important. In the two generations before 1914, European society as a whole had been transformed more fundamentally than in centuries of earlier history. It was hard for anyone to keep his balance amid dramatic economic, social, and cultural change; predictions as to where change might lead in the future could inspire even greater giddiness…
LINK: <https://archive.org/details/endoftsaristruss0000liev>
Before 1770, there were historical changes—political/military, literary/ideological/cultural, religious/social, and economic/technological. They worked on different time scales. Political/military affairs could overthrow orders and make new ones inside of a decade; literary/ideological/cultural required a generation; religious/social took a few centuries; and economic/technological took close to a millennium, at least. What that meant is that people might find themselves operating in a political/military context that might be brand-new, and in a literary/ideological/cultural framework that diverged from that of their parents, they still operated in a religious/social context that their grand- and great-grandparents would have found familiar, and there was barely any memory at all that there might have been a time in which the patterns of technology were substantially different. The fact that major changes in different realms proceeded along such different time scales had powerful consequences for how patterns of action and the institutions and orders that channeled them came under stress and were adopted in response.
From 1770 to 1870 the pace of economic change quickened. But it was really not the case that “all that was solid melts into air”.
That did not become true until after 1870.
But after 1870 it became true with a vengeance. And so over 1870-2010, repeated technological and economic revolutions shook, and shook, and shook the human world to pieces over and over again, and then people had to try to pick the pieces up and assemble them into something over and over again.
That was very different than all previous history.
Not immediately relevant to the major point I want to make about what is truly different about the history of the 20th century, but very interesting anyway, is what immediately follows in Lieven’s book: his rant against “civil society”:
Dominic Lieven: The End of Tsarist Russia: The March to World War I & Revolution: ‘…A common feature across Europe was the growth of civil society and its impact through the press, lobbies, and political parties on governments. In contemporary parlance, civil society is always supposed to be on the side of the angels. As regards international relations in pre–1914 Europe, this was not true. Civil society, meaning above all the press, often played a big role in stoking international conflict. This might be just a question of pandering to public prejudices and thirst for sensations, but it rattled and bedeviled policy makers nonetheless.
More serious were systematic efforts to use foreign policy as a means to generate nationalist support for governments at home, in the process undermining the rational calculations on which diplomatic bargaining was based. No great power, Russia included, was entirely innocent in this respect…
LINK: <https://archive.org/details/endoftsaristruss0000liev>
On the one hand, Lieven wants to take the side of sober statesman seeking the public good finding themselves overwhelmed by the irrational passions of the gutter press-stoked “mob”, using the old word for "uncivil society”. Consider Winston Churchill on the shift of Britain to anger, fear, and launching the pre-WWI naval Cold War against imperial Germany: “The [Liberal] government offered [to build] four [dreadnought battleships a year], the navy demanded six, and we compromised on eight”—because of pressure from civil society and the press.”
On the other hand, Lieven recognizes that “busy[ing] giddy minds with foreign quarrels”, in the words of Shakespeare’s King Henry IV Lancaster, is often the most convenient tactic that a shaky élite that is losing any legitimate social role can undertake to try to shore up its dominance. The classic statement, according to Count Witte, is supposed to be that of Czarist Interior Minister Plehve in a cabinet meeting: “Alexei Nikolaevich, you do not understand Russia’s internal situation. To contain the revolution, we need a short victorious war!” And the classic argument that this tendency was the major root of World War I is: Arno Mayer (1981): The Persistence of the Old Régime: Europe to the Great War <https://archive.org/details/persistenceofold0000maye>.
Very Briefly Noted:
Gideon Rachman: Ukraine & the Start of a Second Cold War <https://www.ft.com/content/34481fbd-4ca7-4bb3-bef5-e68fefed7438>
Michele Jamrisko: Has Inflation Peaked? Signs Are Flashing in Chips, Shipping, Fertilizer <https://www.bloomberg.com/news/articles/2022-06-06/peak-inflation-signs-are-flashing-in-chips-shipping-fertilizer#xj4y7vzkg>
Elaine Weiss (2013): Mismatches in Race to the Top Limit Educational Improvement: Lack of Time, Resources, and Tools to Address Opportunity Gaps Puts Lofty State Goals Out of Reach <https://www.epi.org/publication/race-to-the-top-goals/>
Bob Yirka: Making Blockchains More Efficient: Calculate a Useful Task as Part of the Consensus Mechanism<https://techxplore.com/news/2022-06-blockchains-efficient-task-consensus-mechanism.html>
William D. Cohan: The SPAC Stars of ’21: Where Are They Now?: ‘SPAC-mania, a consensual hallucination in which everyone, from Ackman to A-Rod, got in on the SPAC craze. It may have been easy to raise all those billions, but it turned out to be much harder to put them to work… <https://puck.news/the-spac-stars-of-21-where-are-they-now/?_cio_id=f6c60600ef33f033>
Ed Dolan: Trust, State Capacity, & the Epidemiological Mystery of Covid: ‘Trust played an important role in the response to the COVID pandemic but it finds a larger role for state capacity… <https://www.niskanencenter.org/trust-state-capacity-and-the-epidemiological-mystery-of-covid/>
Twitter & ‘Stack:
John Quiggin: Memo RBA: We Ought to Live with Inflation, More of It: ‘The RBA… should reset its inflation target to 4%, or better still dump inflation targeting in favour of nominal GDP targeting…
Ross Barkan: The Jews & Italians Against Liberalism: ‘“They feel the pressure, like everything is fading away,” one local explained. “It’s all in danger: the house you always wanted is in danger, the kids are in danger, the neighborhood is in danger. It’s all slipping away.”… In 1985, the Barnard sociologist Jonathan Rieder published a book that is little-known today. Canarsie: The Jews and Italians of Brooklyn Against Liberalism…
Ryan Avent: Does Not Compute: ‘The issue isn’t just one in which some individuals receive bad information, but rather one in which we all engage with each other a little differently, we are all part of the problem…. These networks want us to perform, and that we can instead choose not to. We can be silent, or gracious, or both…. We can do better. We have to, if we want to get through this…
Paragraphs:
What good could those paying for order flow possibly be up to? And there are so many ways to get dopamine hits that are a lot cheaper in the long-run than is buying GameStop, so doing anything to make people think a bit more and so break the dopamine-hit addiction seems worthwhile to me:
Matt Levine: Retail Trading Is About to Change: ‘Surely if market makers are paying retail brokers for order flow it is because they are up to no good…. It seems like a conflict of interest: If the retail brokers are getting paid to send their orders to market makers, how can you trust that they’re doing the right thing for the retail orders?… Will this be good for retail execution? The wholesalers say no, though they would…. And nobody exactly says yes. And yet everyone is mad about the current system, so I suppose scrapping it and starting over is a political winner. Also the potential bad outcome here is that retail investors will get worse execution or won’t be able to trade for free, and I am not sure that the SEC would mind that…. GameStop…. Too many people were buying GameStop at seemingly irrational prices. One could imagine the SEC wanting to rewrite the rules to add frictions…. If the retail trading experience got a bit worse, there might be a bit less retail trading, and deep down that might be what the SEC wants…
LINK: <https://www.bloomberg.com/opinion/articles/2022-06-07/retail-trading-is-about-to-change#xj4y7vzkg>
A nice point: I cannot see a newspaper headline and plunk down a quarter to quickly and immediately buy a daily copy anymore—yet the software technology is easily there:
Steve M.: Disinformation Wants To Be Free: ‘I don’t know why the elite media has given up on non-subscribers. In the days of print, newspapers and magazines pursued subscriptions, but they also cared about single-copy sales at newsstands. I’m not aware of any major media outlet that makes it easy to read an individual story for a small micropayment, and you can’t sign up for any site that provides even limited access to multiple news sites for a monthly fee. So people with money sign up for a few sites and Substacks, and everyone else makes do with what their Facebook friends repost, or what CNN and local free news sites offer, or what they see on TikTok and Instragram and YouTube. And the result is that professional disinformationists and people suffering from toxic fandom have opportunities to dominate the news, because most of their content is free. That’s bad for society, but it’s what the market dictates, I guess…
LINK: <https://nomoremister.blogspot.com/2022/06/disinformation-wants-to-be-free.html>
I really need to read this again, more carefully: I do not understand why their number is so low:
Klaus Adam & al.: Why Central Banks Should Aim For a Positive Inflation Target: ‘Using new micro price data, this column investigates how high the optimal inflation rate must be to prevent relative product demand from being distorted. In contrast to a common claim, it finds that the optimal rate is not zero for a large part of the euro area, but is, in fact, clearly in positive territory… lies between 1.1% and 1.7% in the three largest euro area countries…
LINK: <https://voxeu.org/article/why-central-banks-should-aim-positive-inflation-target>
The problem is that wherever crypto is gaining the potential for serious used cases, it is precisely because people really, really, really do not trust the probable kleptocrats who are going to control the levers of financial regulation. My view: in some places, crypto does not have a plausible used case that is non-destructive, and in such places it needs to be regulated into near non-existence because it is a harmful grift; in other places, it may become a response to government failure and thus a useful safety valve. Nevertheless, I cannot help but feel that a lot less can go wrong with dollarization—adopting the U.S.’s financial framework and using that—than with cryptoization:
Kenneth Rogoff: What’s the Crypto Regulation Endgame?: ‘Ultra-low interest rates flattered crypto, and young investors are now getting a taste of what happens when interest rates go up…. Some economists naively argue that there is no particular urgency to regulate Bitcoin and the like, because cryptocurrencies are difficult and costly to use for transactions. Try telling that to policymakers in developing economies, where crypto has become a significant vehicle for avoiding taxes, regulations, and capital controls…. I am not suggesting that all blockchain applications should be constrained. For example, regulated stablecoins, underpinned by a central-bank balance sheet, can still thrive, but there needs to be a straightforward legal mechanism for tracing a user’s identity if needed…
It does seem that the only reasonable reaction to Ilya Shapiro's panicked dismay at the failure of Georgetown University to cancel him, and thus the prospect that he might actually have to do a job, is simply laughter:
Scott Lemieux: I Can See by What You Carry that You Come from Bari-Town: ’Ilya Shapiro…. “Georgetown University Law Center reinstated me last Thursday. But… I concluded that remaining in my job was untenable…” “Cancel culture” is when you can voluntarily quit your job for a more lucrative no-work grift somewhere else and are given immediate access to the most widely-read newspaper in the country to whine about how you’ve been cancelled (even if to be all technical about it you self-cancelled.) The free market is being fired because you she up for work 5 minutes after your shift starts because the bus was late…
“Hurricane” seems very much the wrong metaphor. “Storm clouds” or “potential storm” seems much more right to me. So what is Jamie Dimon seeing that I am not that leads him to leap for that metaphor?:
Scott Krisiloff & E.K. Mokaya: A Hurricane is Coming!: ‘Jamie Dimon see[s]… a hurricane approaching and venture capitalists saying that we’re seeing the end of an era of unprofitable growth. On the other hand, economic activity at the moment is still relatively “sunny.” Consumer spending is showing no signs of abating and supply chains may finally be starting to heal. Still, the Fed is not ready to reverse course and so rising interest rates are likely to put pressure on capital markets and, therefore, the economy…. Jamie Dimon…. "Look, I’m an optimist. I said there’s storm clouds, they’re big storm clouds, they’re—it’s a hurricane; it’s, we—right now it’s kind of sunny, things are doing fine, everyone thinks the Fed can handle this. That hurricane is right out there down the road coming our way. We just don’t know if it’s a minor one or Superstorm Sandy or—yes, Sandy or Andrew, or something like that…
LINK: <https://thetranscript.substack.com/p/06-06-2022-a-hurricane-is-coming-free>
In þe Generations After 1870, All Þt Is Solid Does Melt into Air, &
A question to those much smarter than I on the hypothesis that the masses (mob) mattered much more after 1870. No doubt it is true as revolutions show us but how much of that is perception in the same way that anthropologists know an awful lot about “cave men” simply because only those bones got preserved and archaeologists know an awful lot about kings and priests because of pyramids and churches but ancient historians just were never all that interested in the mob before it became easier to record their doings in the 1800s? Mary Beard’s SPQR is great but she acknowledges figuring out how much the masses influenced Caesar and Cicero is tough because Caesar and Cicero didn’t really write about the commoners. Tolstoy probably would have said Caesar was delusional thinking he crossed the Rubicon on his own volition.
RE Klaus Adam When I talk with non-economists, I DO start with an explanation of why the optimal rate of inflation is not zero, but how does someone on Vox need to gently explain why zero is wrong? And if you can figure out how they came up with LESS than the conventional wisdom of 2%, please let us know.
Link back to Quiggins: I do whish that people who think that the target (explicit or implicit withing an NDGP target) should be X% or whatever, would show the (long run real income per capita maximizing?) model that gave them that conclusion. And avoiding the ZLB does not count except as pushing ST rates below zero can be show to affect the objective function.
Personally for a long time I was skeptical that the size of the real shocks we could expect made anything more than 2% [and "whatever it takes"] necessary. With the retreat of globalization I think shocks will be larger and the optimum, yes, >2%. But I'm just a lowly development economist. I want the inflation target to be the considered opinion of the thousands of macroeconomist at the FRB, not the seat of my pants.