NOTES: Dario Perkins Reminds Us That This Is Not a Normal Business Cycle, & Angus Byelma Reviews "Slouching Towards Utopia"...
&, I think, slightly misinterprets what Karl Polanyi's idea of "society" is...
&, I think, slightly misinterprets what Karl Polanyi's idea of "society" is...
Economic History: Thanks much for the review of “Slouching Towards Utopia” <bit.ly/3pP3Krk>!
My reading of Polanyi is that he notes that people will not stand for a society in which wealth is the only source of social power, and that people will especially demand that the use of the land—the shape of the built and non-built environment—the levels of individuals incomes, and most of all that the allocation of finance to keep the wheels of industry going must conform to non-economic social and sociological expectations and intuitions of what is appropriate. From one perspective this is market economic logic vs. social justice. From another perspective, we must never forget that often what people feel to be "social justice" is profoundly unjust: worse for you not to receive from the market the income you deserve is for you to watch others receive much larger incomes than they deserve. And I think Polanyi recognized that.
Thus I do not think Polanyi thought that "fascism... [had] nothing to do with racism, nationalism, conservatism". That the market was not validating keeping the Black man down, keeping the Pole in his place, keeping women in the kitchen was a key part of the societal half of the part of Polanyi's double movement in which society tried to constrain and control the market.
And we do see all of that at work today...
Angus Bylsma: Brutishly Short?: ‘Polanyi’s bold point was that social-economic conflict the onrush of market society generated was the mechanism of history. Fascism, for example, was nothing to do with racism, nationalism, conservatism, and so forth. But DeLong’s narrative is, in this regard, strikingly non-Polanyian. The collapse of the post-war social democratic consensus is attributed to, in no particular order, fear of ‘moochers’ and the free-rider problem, policy misadventures in government monopolies, and the failure to combat inflation effectively in the early 70’s… <
Economics: The principal lessons going forward from the COVID depression and subsequent reopening is that there are no principal lessons going forward from such a one-off episode:
Dario Perkins: : ‘2020 was not a normal recession. The downturn was not the result of any organic macro process or a response to some underlying financial imbalance…. Since then, we have seen huge macro distortions from a variety of sources, including: Massive rotations in consumer spending…. Logistical chaos…. Further supply shocks from the war in Ukraine…. Pent-up demand and “revenge spending”…. Demand-supply mismatches in jobs markets…. “Volume destruction” from very high inflation (rising prices reduced real spending power)…. Confusing signals out of China…. What did mainstream economics get wrong? Petty much everything…. Main errors were: Allured by faulty leading indicators…. Mislead (again) by the Phillips curve…. Confused by levels effects…. Getting causal relationships wrong…. This has been a fake cycle, caused by massive temporary distortions… <https://blogs.tslombard.com/where-are-we-in-the-cycle>
“Spatial Computing”: Back in 2007—only 17 years ago—Steve Jobs introduced the Apple iPhone as three devices: “a widescreen iPod with touch controls; a revolutionary mobile phone; and a breakthrough Internet communications device…" <https://www.perplexity.ai/search/iphone-introduction-transcript-y8CCgecCTASB5I99IFpQDw?s=c>. John Gruber today sees the Apple visionPro as worth it right now as an entertainment device—anyone thinking of spending more than $2,000 on an individual home-entertainment system should get an Apple visionPro RIGHT NOW—as pointing to the likely future of spatial, or what used to be called ambient, computing, and as demonstrating that even with near-infinite money headset technology is only compelling for the crazed. But I am sensing the same “early adopters here are living in the future” vibe one gets rarely—with the Osborne and Apple II PCs, with the Macintosh, with the iPhone, with the Tesla Model S, and… I cannot really think of other hardware examples in my lifetime:
John Gruber: The Vision Pro: ‘For the last six days, I’ve been simultaneously testing three entirely new products from Apple. The first is a VR/AR headset with eye-tracking controls. The second is a revolutionary spatial computing productivity platform. The third is a breakthrough personal entertainment device…. These are not three separate devices. They’re one: Apple Vision Pro. But if you’ll pardon the shameless homage to Steve Jobs’s famous iPhone introduction, I think these three perspectives are the best way to consider it…. It’s too heavy and too big for everyone, and too expensive for the mass market. But, like that original iPhone and the original Macintosh before it, this first Vision Pro is no joke…. The conceptual design of VisionOS lays the foundation for an entirely new direction of interaction design. Just like how the basic concepts of the original Mac interface were exactly right, and remain true to this day. Just like how the original iPhone defined the way every phone in the world now works…. Vision Pro is simply a phenomenal way to watch movies, and 3D immersive experiences are astonishing. There are 3D immersive experiences in Vision Pro that are more compelling than Disney World attractions that people wait in line for hours to see…. I can recommend buying Vision Pro solely for use as a personal theater. I paid $5,000 for my 77-inch LG OLED TV a few years ago. Vision Pro offers a far more compelling experience…. Spatial computing in VisionOS is the real deal. It’s a legit productivity computing platform right now, and it’s only going to get better. It sounds like hype, but I truly believe this is a landmark breakthrough like the 1984 Macintosh and the 2007 iPhone… <https://daringfireball.net/>
Neofascism: I confess that I had not thought until this weekend that even Elon Musk could manage to drive Twitter into bankruptcy in less than three years. But now I think that is more likely than not: turning the whole platform into the Nazi bar in such a short time is one hell of an accomplishment!:
Drew Hartwell ‘X has now for two days blocked all searches for one of the world's biggest superstars, during a very newsy weekend, because it couldn't stop AI-generated sex images of her. If only X hadn't fired 80% of its workers and most of its "trust and safety" team… <bsky.app/profile/drewharwell.com/post/3…>
Journamalism: Word-salad from the Bloomberg Editorial Board. What “Federal Reserve dilemma” are they talking about? What could they be possibly talking about? A “dilemma” is when you face two (or more) options with significant drawbacks. But what might those drawbacks be?
The question “will there be a soft landing?” was “can the Fed get core-PCE inflation back to 2% per year with expectations aligned to that target of its without a deep recession?” The answer to that question turns out to have been: yes. The soft landing has been achieved. It is time to declare victory with respect to that question. With the macroeconomy in balance—in neutral—policy should be rapidly moving toward neutral as well, and should continue to do so until some new shock hits.
Yes, there is a future. And the future will raise new challenges for monetary policy. But to pretend right now that the macroeconomy is not in balance is to simply be stupid. Yet the Bloomberg Editorial Board appears desperate to pretend that there is some important dimension along which the macroeconomy is out of balance. But all they can offer is word-salad:
Bloomberg Editorial Board: Federal Reserve’s Dilemma Is a Nice Problem to Have: ‘A hoped-for soft landing is increasingly plausible, but this won’t make the Fed’s job any easier…. The central bank’s policymakers need to weigh risks and uncertainties that could still upend expectations…. Progress made so far on inflation. The Fed’s preferred… price index… rose 2.9% in December from a year earlier…. For the second half of 2023, core PCE prices went up by just 1.9% at an annual rate, bringing that metric back to the Fed’s 2% target. Even so, it’s too soon to declare victory…. If [the Fed] anticipates too eagerly, and demand does not subside as expected, an overstimulated economy might, even now, overturn the central bank’s apparent victory over inflation… <https://www.bloomberg.com/opinion/articles/2024-01-30/federal-reserve-s-dilemma-on-interest-rates-and-the-economy?srnd=opinion>
I can only conclude that Bloomberg is looking to keep money more expensive for political reasons. There is a conventional wisdom that if rates start to drop now it helps Biden.
I think there's _some_ legitimacy to saying that we will not know whether "soft landing" was achieved until we know both that we "landed" (inflation got down to 2% _and then did not rebound_), and the landing was "soft" (we did not have a recession, related to bringing inflation down). If the plane hits the runway and then bounces back into the air before it comes to a stop, did it land?
How long does inflation need to stay in, say, a 2 to 2.5 range, before we say we've landed? People could disagree. I'd say one full year seems like a reasonable benchmark? And we've been below 2.5 for what, six-ish months?
In any case, given that interest rates are still high -- high enough that we're seeing a slowdown in residential and commercial construction -- I wouldn't necessarily say we're _entirely_ done with the effects of the COVID and Ukraine supply shock. The so-called "dilemma" is: Should the Fed continue to hold rates at their current elevated (relative to the past couple decades) level, for fear of having inflation tick back up if they lower rates; or should they start cutting immediately, for fear of causing a recession if they leave nominal rates high, with real rates rising since inflation is falling.
I do not think this is _much_ of a dilemma, though. As soon as you acknowledge that _real rates are rising_, it seems silly to suggest that we have to stand pat on nominal rates. If current policy has achieved a Goldilocksian just-rightness, then maintaining that just-right policy means cutting sooner rather than later. Powell & Co. seem to have navigated between the Scylla of rebounding inflation, and the Charybdis of recession, extraordinarily well, thus far, and their forward guidance for this year -- that cuts will start soon and there will likely be at least three -- seems pretty reasonable.