Key insights—economics, finance, political economy, and wrestling with how to teach the world good economics through every means possible, & some means impossible...
PODCAST: Hexapodia LIII: Rule #1: No Schmittposting!
Liberals vs. leftists once again, with the principal conclusion being that trying to find and join your tribe by shouting online—Schmittian picking-an-enemy as the core of your identity—is no way to go through life, son. Nor is artfully screenshotting in order to make sure your readers do not see the sentence just below the ones you quote.
In which we discuss the positions of “Brianna”, Matt”, and “Ezra”—who are SubTuring concepts in our minds with whom we have parasocial relationships, and are not real persons named Brianna Wu, Matt Yglesias, and Ezra Klein—on where the boundary is between the decent, realistic, progress left on the one hand, and people who need to get a clue and stop making own-goals on the other.
* No Schmittposting— trying to find and join your tribe by shouting online—Schmittian picking-an-enemy as the core of your identity—is no way to go through life, son.
* Nor is artfully screenshotting in order to make sure your readers do not see the sentence just below the ones you quote.
* Don’t pick bad and stupid ends to advocate for—anarcho-pastoralism, the elimination of the United States or America, abolishing police, abolishing prisons, degrowth, destroying statues of Ulysses S. Grant, calling for the cancellation of Abraham Lincoln.
* Do think, always: will this post advance humanity’s collective smartness as an anthology intelligence?
* Don’t call for throwing public money at nonprofits in urban America.
* Advocate for a political focus on social issues only when they are ripe—when the pro-freedom and pro-flourishing position is genuinely popular.
* But the Democratic Party and the left can and should focus on both economic and social issues—and should be smart about doing so.
* Blue-state politicians should be willing to press the envelope on social issues—witness Gavin Newsom as mayor of San Francisco on gay marriage.
* Purple-state politicians should stress that this is a free country for free people, which means:
* economic opportunity…
* social freedom—you should be able to live your life without the government harassing you, and without neighbors and merchants harassing you by refusing service when their job is to serve the public…
* collective wealth…
* collective concern—global warming may not be so bad for you in the medium-run, but it is a serious medium-run problem for those SOBs in Florida and Louisiana, and for rural communities at the wildfire edge…
* Red-state politicians need our thoughts and prayers.
* Policy analysts and legislative tacticians should design and implement policies that are:
* visible, perceived successes…
* that build coalitions by the wide of visible distribution of their benefits…
* but that do not allow individual coalition partners to become veto point owners: seats at the table, yes; dogs in the manger, no…
* Left-wing think-tanks should not take money from “leftists” who want to use procedural obstacles to block green investments in their backyards.
* Preliminary Food for Thought for Þe “Hexapodia” Taping:
* Brianna Wu: ‘There’s a huge schism… Policy Leftists and Infinite Leftists…
* Matt Yglesias: The two kinds of progressives: ‘Moralists vs. pragmatists…
* Ezra Klein: The Problem With Everything-Bagel Liberalism: ‘Cost, not just productivity, is a core problem for the U.S. semiconductor manufacturing industry…
* Brad DeLong: Pass the Baton…
* Noah Smith: Our climate change debates are out of date…
* Noah Smith: Degrowth: We can't let it happen here!…
* Noah Smith: ‘Once you realize that the animating drive of all NIMBYism on both the left and the right is to be able to live in perpetually-appreciating single-family homes with no poor people nearby, everything they say becomes instantly comprehensible and intensely boring.
* Rocket Podcast
+, of course:
* Vernor Vinge: A Fire Upon the Deep https://archive.o
PODCAST: Hexapodia LII: Growth, Development, China, the Solow Model, & the Future of South & Southeast Asia
* The Chinese Communist Party is very like an aristocracy—or maybe it isn’t…
* If it is, it will in the long run have the same strong growth-retarding effects on the economy that aristocracies traditionally have…
* Or maybe it won’t: China today is not Europe in the 1600s…
* We probably will not be able to get Noah to read Franklin Ford: Robe & Sword: The Regrouping of the French Nobility After Louis XIV https://archive.org/details/robesword0000unse_g7d2> to dive more deeply into analogies & contrasts…
* Southeast Asia’s future is very bright because of friendshoring…
* India’s future is likely to be rather bright too—it looks like a much better economic partner for the rest of the world over the next two generations than does China…
* You can get pretty far by just massively forcing your society to build lots and lots and lots of capital…
* Especially if you have an outside country you can point to and say “give me one—or five—of those!”…
* But quantity of investment has a quality of its own only so far…
* We think of technology as the hard stuff…
* But actually the hard stuff is institutions, property rights, government—people actually doing what they said they would do, rather than exerting their social power to welsh on their commitments…
* We are surprised and amazed at China's technological excellence in electric vehicles, in battery and solar technology, in high-speed rail, and so forth…
* But those are relatively small slices of what a truly prosperous economy needs…
* For everything else, we have reason to fear that the logics of soft budget constraints and authoritarian systems are not things China will be able to evade indefinitely…
* Is that a middle-income trap? It certainly functions like one…
* Brad DeLong: DRAFT: What Is Going on wiþ China’s Economy?:
* Daniel W. Drezner: The End of the Rise of China?
* Daniel W. Drezner: The Rising Dangers of a Falling China
* Daniel W. Drezner: Can U.S. Domestic Politics Cope With a Falling China?
* Arpit Gupta: What's Going on with China's Stagnation?
* János Kornai, Eric Maskin, & Gérard Roland: Understanding the Soft Budget Constraint https://www.jstor.org/stable/3217457>
* Adam S. Posen: The End of China’s Economic Miracle https://www.foreignaffairs.com/china/end-china-economic-miracle-beijing-washington>
* Kenneth Rogoff: The Debt Supercycle Comes to China https://www.project-syndicate.org/commentary/country-garden-shows-debt-supercycle-comes-to-china-by-kenneth-rogoff-2023-08>
* Noah Smith: Real estate is China's economic Achilles heel
* Noah Smith: Why is China smashing its tech industry?
* Adam Tooze: Whither China? Part I - Authoritarian impasse?
* Adam Tooze: Whither China? Part II - Posen v. Pettis or "authoritarian impasse" v. "structural dead-end”
* Adam Tooze: Whither China? Part III: Policy hubris and the end of infallibility
* Lingling Wei & Stella Yifan Xie: China’s 40-Year Boom Is Over. What Comes Next? https://www.wsj.com/world/china/china-economy-debt-slowdown-recession-622a3be4>
+, of course:
* Vernor Vinge: A Fire Upon the Deep https://archive.org/details/fireupondeep00ving_0/mode/1up>
Get full access to Brad DeLong's Grasping Reality at braddelong.substack.com/subscribe
PODCAST: Hexapodia LI: Begun, Þe Attack on Biden Industrial Policy Has!
* Critics: Cato-style libertarians, including AEI’s Michael Strain. The last die-hard classic Milton Friedman-style economic libertarians—and starting in 1975, Milton Friedman would say, every three years, that the Swedish social democratic model was going to collapse in the next three years.
* Critics: Progressives—Biden is a tool of the neoliberals, and secretly Robert Rubin in disguise. People like David Dayen. They seem to be going through the motions—half-heartedly making their arguments to try to shift the Overton Window, but knowing deep down that Biden is about as good as they are going to get
* Critics: Ezra Klein and the other supply-side progressives, worried that Bidenomics in danger of supporting too much procedural obstacles through “community engagement” and “consensus building”, and will wind up pissing its money away without boosting America’s productive capacity.
* Critics: The Economist magazine and some of the people at the Financial Times, writing about how the Biden administration’s policies are “mismanaging the China relationship” and raising “troubling questions”—that decoupling will never work, that Chinese manufactured products are too good and too cheap to pass up; that you can’t correct for for externalities; & c.
* Critics: Macro policy was unwise, inflationary, and pissed away on income support resources that ought to have been used to boost industrial development. But Biden may skate through because he was undeservedly lucky.
* The real critique: Implementation—the U.S. government does not have the state capacity to pick or subsidize “winners” in the sense of companies whose activities have large positive externalities.
* To deal with (6), supporters of Bidenomics need to (a) figure out what the limits of U.S. state capacity are, and (b) shape CHIPS and IRA spending to stay within them; meanwhile, critics need to (c) come up with evidence of overreach on attempts to use state capacity to do things.
* What is valid in the criticisms of Bidenomics is part of a more general critique—that we have a society in which there are limited sources of social power, namely, primarily money, secondarily a somewhat threadbare rule of law, tertiarily a somewhat shredded state administrative staff. We need other sources of social power—like unions, civic organizations, and so forth that aren’t just politicians and NGOs that use direct-to-donor advertising to terrorize and guilt-trip their funders, and that take government money and use it to do nothing constructive at all.
* Friendshoring rather than onshoring.
* Japan is potentially an enormous productive asset for the U.S. to draw on.
* And, of course: Hexapodia!
* Libby Cantrill & al.: CHIPS & Science Act ‘The Closest We’ve Had to Industrial Policy’ in Decades…
* Economist: The lessons from America’s astonishing economic record: ‘The more that Americans think their economy is a problem in need of fixing, the more likely their politicians are to mess up…. Subsidies… risk dulling market incentives to innovate… [and] will also entrench wasteful and distorting lobbying https://www.economist.com/business/2023/04/10/americas-800bn-climate-splurge-is-feeding-a-new-lobbying-ecosystem>…
* Economist: The world is in the grip of a manufacturing delusion: ‘How to waste trillions of dollars…. Governments… view… factories as a cure for the ills of the age—including climate change, the loss of middle-class jobs, geopolitical strife and weak economic growth—with an enthusiasm and munificence surpassing anything seen in decades…
* Henry Farrell: Industrial policy and the new knowledge problem: ‘Modern industrial policy… [requires] investment and innovation decisions [that] involve tradeoffs that market actors are poorly equipped to resolve…. [Yet] we lack the kinds of expertise that we need…. This lack of knowledge is in large part a perverse by-product of the su
Hexapodia L: Why Is Such a Good Economy Seen as Bad?
* Brad has a new microphone!
* Noah has jet lag: he is just back from Japan.
* Brad has jet lag: he is just back from Australia.
* Perhaps inflation’s ebbing has not yet made its way into the minds of people when they answer pollsters.
* We reject the hypothesis that it is because of lagging real incomes.
* More difficult mortgage borrowing and positive interest payments on car loans are a thing, but really unlikely to be a big thing.
* It seems likely that 2024 will be, if not “morning in America” from a consumer confidence in America, a crepuscular pre-dawn lightening in America.
* Noah's theory springing out of Rick Perlstein's take on the 1970s—that we are replaying it:
* Even in the 1970s, it was not inflation but “social upheaval”
* Half “Blacks and women are forgetting their place”
* Half “things are very insecure and unsafe”.
* The 1970s saw right-wing revolts
* The 1970s saw left-wing disillusionment
* And then along came inflation!
* Is this cycle repeating itself?
* Our guess is that “vibecession” has peaked—but we worry that Kyla Scanlon may be right in thinking it has deeper roots. This is a much more unequal society for white guys than we had in the 1970s.
* Brad DeLong trusts center-left economists, and they say: (4), (5), (6), and (7).
* Noah Smith summarizes: Normie Libs keep winning…
* Noah Smith summarizes: Normie Libs keep winning because they mark their beliefs to market and trust empirical data…
* Barry Eichengreen: The US Economy Is Up, so Why Is Biden Down? https://www.project-syndicate.org/commentary/biden-popularity-lagging-strong-us-economy-by-barry-eichengreen-2023-08>: ‘The outcome of the US presidential election next year, like most before it, will almost certainly turn on domestic economic conditions, or, more precisely, on perceptions of economic conditions. And recent polling suggests that the disconnect between perception and reality may be President Joe Biden’s biggest problem…. Now that personal consumption expenditure inflation is back at roughly 3%, down by nearly two-thirds from its peak, will Biden get more credit for his economic achievements? The answer will turn, first, on whether there is widespread public recognition that inflation has receded. Any such realization will not be immediate…. This slowness of beliefs to adapt to actual economic conditions is likely to be even more pronounced in an era of fake news…
* Darren Grant: When it comes to the economy, everything’s great and no one’s happy https://www.vox.com/money/2023/8/10/23824742/real-wages-economy-inflation-no-money>: ‘Why a supposedly good economy is making so many people miserable…. Pollsters regularly ask Americans how they think the economy is doing, and whether it is getting better or worse. Both measures have drifted downward since late 2020 and cratered this past year. Everything’s amazing, almost—and nobody’s happy. This is new. Public opinion had historically followed the business cycle, declining in recessions and improving in expansions like the one we’re experiencing now. For observers of the economy, this divergence was akin to being lost in the woods. They trotted out all sorts of explanations for our unexpected pessimism…. What’s going on isn’t vibes…. People’s pay hasn’t been keeping pace with inflation…
* Mike Konczal: ‘It’s tough to judge noise https://twitter.com/mtkonczal/status/1689625642046771200> from signal in monthly analysis…. A way to get around monthly myopia: look at longer periods and past used cars and shelter prices. How does 3/6-month ‘supercore’ measure look? That’s what the Fed is doing, and it looks fantastic. We’ve seen dips since 2021, but not like this. 3-month lower than prepandemic!…
* Paul Krugman: ‘Lots of number-crunching out there https://twitter.com/paulkrugman/status/1689638373403803648>, but this was another very good inflation report. The debate o
Hexapodia XLIX: We Cannot Tell in Advance Which Technologies Are Labor-Augmenting & Which Are Labor-Replacing
* Brad’s microphone is dying, and a new one is on order.
* However, 75% of the talking on this episode is Noah: he came loaded for bear.
* Although Noah has not yet read Acemoglu & Johnson’s Power & Progress, he nevertheless has OPINIONS!
* Friedrich von Hayek was right when he pointed out that we could not know the shape of future technologies
* Particularly, we cannot know where, as new technologies develop, they will settle in the balance between tacit-local and formal-generalizable-centralizable knowledge with respect to what is needed to make them actually work.
* Thus the ex ante error rate in figuring out in advance whether a branch of knowledge is labor-augmenting or labor-replacing is high.
* Better not to try to channel R&D in labor-augmenting directions: we have powerful, well-known, useful, and reliable tools for improving equity: use them rather than trying to guide future technologies in a labor-augmenting equality-promoting direction.
* Noah will read Power & Progress before mid-August.
* Brad will try to come up with examples of technologies other than the power loom that we wish had been adopted more slowly.
* Daron Acemoglu & Simon Johnson: Power & Progress: Our Thousand-Year Struggle Over Technology & Prosperity https://www.amazon.com//dp/B0BD4DV59F>
* Daron Acemoglu & Pascual Restrepo: “The Race Between Machine & Man: Implications of Technology for Growth, Factor Shares & Employment” https://www.nber.org/papers/w22252>
* Daisuke Adachi, Daiji Kawaguchi, & Yukiko Saito: Robots and Employment: Evidence from Japan, 1978-2017 https://econpapers.repec.org/paper/etidpaper/20051.htm>
* Jay Dixon, Bryan Hong, & Lynn Wu: The Robot Revolution: Managerial and Employment Consequences for Firms
* Karen Eggleston, Yong Suk Lee, & Toshiaki Iizuka: Robots and Labor in the Service Sector: Evidence from Nursing Homes
* Katja Mann & Lukas Püttmann: Benign Effects of Automation: New Evidence from Patent Texts https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2959584>
* Lawrence Mishel and Josh Bivens: The zombie robot argument lurches on: There is no evidence that automation leads to joblessness or inequality
* Arjun Ramani & Zhengdong Wang: “Why transformative artificial intelligence is really, really hard to achieve” https://thegradient.pub/why-transformative-artificial-intelligence-is-really-really-hard-to-achieve/>
* Noah Smith: American workers need lots and lots of robots: With the power of automation, our workers can win. Without it, they're in trouble
* Melline Somers, Angelos Theodorakopoulos, & Kerstin Hötte: The fear of technology-driven unemployment and its empirical base https://cepr.org/voxeu/columns/fear-technology-driven-unemployment-and-its-empirical-base>
* Melline Somers, Angelos Theodorakopoulos, & Kerstin Hötte: Technology and jobs: A systematic literature review https://www.oxfordmartin.ox.ac.uk/publications/technology-and-jobs-a-systematic-literature-review/>
+, of course:
* Vernor Vinge: A Fire Upon the Deep https://archive.org/details/fireupondeep00ving_0/mode/1up>
Get full access to Brad DeLong's Grasping Reality at braddelong.substack.com/subscribe
PODCAST: “Hexapodia” is þe Key Insight! XLVIII: The "Late-Antiquity Pause"
* Rome did fall. It did not merely “transform”.
* Across Eurasia, from 150 to 800 or so there was a pronounced “Late-Antiquity Pause” in terms of technological progress and even the maintenance of large-scale social organization.
* There was a proper “Dark Age” only in Britain, Germany, the Low Countries, and France—with Spain, Italy, Switzerland, Austria, and Slovenia being edge cases.
* There was no Dark Age at all in what had been the Roman East—what became what we call the Byzantine Empire and what called itself the βασιλεία Ῥωμαίων—Basileia Rhōmaiōn—but the Byzantine Empire was definitely caught up in the “Late-Antiquity Pause”.
* The Roman Empire starts to decline in the 165-180 reign of the Emperor Marcus Aurelius Antoninus. Population, levels of production, trade, construction, the sophistication of the division of labor, political order, the ability of the army to protect the people from barbarian and Persian raids and armies—all of these begin a pronounced downward trend.
* After 450 there was no real thing called the Roman Empire in what had been its western provinces—no Roman tax-collecting bureaucracy, no administrative bureaucracy to try to make decrees of Roman governors facts on the ground at other than sword’s point, no army large enough to keep any barbarian tribe from going wherever it wanted whenever it wanted.
* After 476, there was nobody even claiming to be Roman Emperor in Italy—not even in the swamp-protected Adriatic coastal fortress of Ravenna, to which Emperor Honorius had fled from the Visigoths in 402.
* The city of Rome itself was never a capital after 476, and was only garrisoned by Byzantine soldiers from 536 to 774.
* After the Fall of Rome, in what had been the western provinces of the Roman Empire trade, the division of labor, urbanization, production of conveniences and luxuries, population, and total production were at a much lower level indeed—it truly was a “Dark Age”.
* But thighbones tell us that the adults who lived in the Dark Age were taller and better-fed than their predecessors under the Roman Empire.
* Perhaps this was because the end of the Roman Empire had seen the end of a cruel and oppressive aristocracy, and was a liberation of the people—there were many fewer slaves, and many many fewer plantation slaves worked to near-death.
* But it is more likely that life became nastier and brutish and more dangerous, but that depopulation did increase farm and pasture size and so produce better nutrition even though the collapse of the Roman Empire’s economic network meant lower overall average living standards—the average farmholder was distressed enough by the collapse of the Pax Romana that he was willing to give up his and his family’s free status and become a bound serf of the local landlord,
* Brad believes that Gregory of Tours was much worse as a prose stylist than Cicero or Tacitus—or great-great uncle Ernest, for that matter. Noah is neutral.
* King Roger the Scylding at his hall of Heorot in the early 500s had no books, and was really happy whenever a bard would come around.
* “After a while I went out and left the hospital and walked back to the hotel in the rain” is perhaps the best sentence of English prose ever written.
* People should not overclaim with respect to the depth and spread of the post-Western Roman “Dark Age”.
* People should not pretend that the Roman Empire in the west did not fall, and that there was no “Dark Age”.
* Non-economic historians need to do the reading—to consider what we know and can learn about population levels, and about the productivity levels, trade patterns, and commodity types that were the fabric of the lives of the people who actually lived. People count, so you need to count people.
* Economic progress is real progress.
* Literacy is a good thing, not a neutral thing.
* People who claim that valuing literacy is “frankly, kind of racist
I just discovered Noah Smith. I find him very insightful, knowledgeable and self aware. I would love to hear a discussion on this podcast with Sam Harris, particularly on race-related issues in the US as well as politics in Israel and the BDS movement.
Very good could be better
Insights are wonderful. However, I’d encourage that when a guest is on that they have the floor for the majority of the time and are allowed to interject. Brad can be a little controlling with the airtime. Thanks for the content!
Recorded outside near a lawnmower
Good analysis (they don’t provide definitions for terms and fail to provide a lot of context for their more abstruse claims), and Noah Smith is never smart enough to record without a hairdryer going in the background of whatever industrial silo he lives in.