"Hexapodia" Is the Key Insight: by Noah Smith & Brad DeLong: Recent Episodes

Brad DeLong

Key insights—economics, finance, political economy, and wrestling with how to teach the world good economics through every means possible, & some means impossible...

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Back after a year on hiatus! Noah Smith & Brad DeLong Record the Podcast They, at Least, Would Like to Listen to!; Aspirationally Bi-Weekly (Meaning Every Other Week); Aspirationally an hour...

Sokrates: The people find some protector, whom they nurse into greatness… but then changes, as indicated in the old fable of the Temple of Zeus of the Wolf, of how he who tastes human flesh mixed up with the flesh of other sacrificial victims will turn into a wolf. Even so, the protector, once metaphorically tasting human blood, slaying some and exiling others, within or without the law, hinting at the cancellation of debts and the fair redistribution of lands, must then either perish or become a werewolf—that is, a tyrant…

Key Insights:

  • We are back! After a year-long hiatus.

  • Hexapodia is a metaphor: a small, strange insight (like alien shrubs riding on six-wheeled carts as involuntary agents of the Great Evil) can provide key insight into useful and valuable Truth.

  • The Democratic Party is run by 27-year-old staffers, not geriatric figurehead politicians–this shapes messaging and internal dynamics.

  • The American progressive movement did not possess enough assibayah to keep from fracturing over Gaza War, especially among younger Democratic staffers influenced by social media discourse.

  • The left’s adoption of “indigeneity” rhetoric undermined its ability to be a coalition in the face of tensions generated by the Hamas-Israel terrorism campaigns.

  • Trump’s election with more popular votes than Harris destroyed Democratic belief that they had a right to oppose root-and-branch.

  • The belief that Democrats are the “natural majority” of the U.S. electorate is now false: nonvoters lean Trump, not so much Republican, and definitely not Democratic.

  • Trump’s populism is not economic redistribution, but a claim to provide a redistribution of status and respect to those who feel culturally disrespected.

  • The Supreme Court’s response to Trumpian overreach is likely to be very cautious—Barrett and Roberts are desperately eager to avoid any confrontation with Trump they might wind up losing, and Alito, Kavanaugh, Gorsuch, and Thomas will go the extra mile—they are Republicans who are judges, not judges who are Republicans, except in some extremis that may not even exist.

  • Trump’s administration pursues selective repression through the state, rather than stochastic terrorism.

  • The economic consequence of the second Trump presidency look akin to another Brexit costing the U.S. ~10% of its prosperity, or more.

  • Social media, especially Twitter a status warfare machine–amplifying trolls and extremists, suppressing nuance.

  • People addicted to toxic media diets but lack the tools or education to curate better information environments.

  • SubStack and newsletters may become part of a healthier information ecosystem, a partial antidote to the toxic amplification of the Shouting Class on social media.

  • Human history is marked by information revolutions (e.g., printing press), each producing destructive upheaval before stabilization: destruction, that may or may not be creative.

  • As in the 1930s, we are entering a period where institutions–not mobs–become the threat, even as social unrest diminishes.

  • The dangers are real,and recognizing and adapting to new communication realities is key to preserving democracy.

  • Plato’s Republic warned of democracy decaying into tyranny, especially when mob-like populism finds a strongman champion who then, having (metaphorically) fed on human flesh, becomes a (metaphorical) werewolf.

  • Enlightenment values relied more than we knew on print-based gatekeeping and slow communication; digital communication bypasses these safeguards.

  • The cycle of crisis and recovery is consistent through history: societies fall into holes they later dig out of, usually at great cost—or they don’t.

  • &, as always, HEXAPODIA!

References:

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A Deepness in the Sky (Zones of Thought series Book 2)

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Noah Smith & Brad DeLong Record the Podcast We, at Least, Would Like to Listen to!; Aspirationally Bi-Weekly (Meaning Every Other Week); Aspirationally an hour...

Key Insights:

  • Brad DeLong says: You say economics and economists in decline—I see bad economists in decline.

  • Brad DeLong says: You see missile defense as remarkably effective—I see it as marginally effective, at best.

  • Brad DeLong says: You say China Shock II—I say China Shock I required the GWB administration as witting and unwitting co-conspirator.

  • Noah Smith says: These are self-refuting prophecies: my defense of missile defense was to say that it can be remarkably effective in a few possible instances, but those plausible ones for the next two decades; my title “the decade of the second China shock” and my subhead “brace yourselves” were intended to spur action to keep there from being a second China shock.

  • Noah Smith says: Economists advising badly had a lot of influence in 2008 and after, and still have a substantial amount today—so the total influence of economists has decreased since 2008, and this is not necessarily a bad thing.

  • The only real way to get nuance is to write a whole book and then have people deeply engage with it, which requires that they be on a trans-oceanic flight with dodgy Wi-Fi, and be otherwise bored.

  • The internet makes us less nuanced than we should be.

  • &, as always, HEXAPODIA!

References:

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A Deepness in the Sky (Zones of Thought series Book 2)

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Noah Smith & Brad DeLong Record the Podcast We, at Least, Would Like to Listen to!; Aspirationally Bi-Weekly (Meaning Every Other Week); Aspirationally an hour...

Key Insights:

  • A number of years ago, Brad DeLong said that it was time to “pass the baton” to “The Left”. How’s that working out for us? #actually, he had said that we had passed the baton—that the absence since January 21, 2009 (or possibly January 21, 1993) of Republican negotiating partners meant that sensible centrism produced nothing—that Barack Obama had proposed John McCain’s climate policy, Mitt Romney’s health care policy, George H.W. Bush’s entitlement-and-budget policy, Ronald Reagan’s tax policy, and Gerald Ford’s foreign policy, and had gotten precisely zero Republican votes for any of those. Therefore the only choice we had was to pass the baton to the Left in the hopes that they could energize the base and the disaffected to win majorities, and then offer strong support where there policies were better than the status quo.

  • But my major initial take was that the major task was to resurrect a sensible center-right, in which I wished the Niskanen Center good luck, but was not optimistic.

  • But everyone heard “Brad DeLong says neoliberals should ‘bend the knee’” to THE LEFT…

  • That is interesting…

  • Should neoliberals bend the knee?

  • How has the left been doing with its baton? Not well at all, for anyone who defines “THE LEFT” to consist of former Bernie staffers who regard Elizabeth Warren as a neoliberal sellout.

  • It has, once again, never missed an opportunity to miss an opportunity.

  • But the conditions that required passing the baton to the left—High Mitch McConnellism, Republican unity saying “NO!” to everything by every Republican to make the Black president look like a weak failure—no longer hold.

  • And the principal adversaries to good governance and a bright American future are reactionary theocrats, neofascist grifters, and true-believer right-neoliberals to the right and cost-disease socialists to the left.

  • But in the middle, made up of ex-left-neoliberals and nearly all other right-thinking Americans, are we supply-side progressives.

  • Instead, there is a governing coalition, in the Senate, composed of 70 senators, 50 Democrats and 20 Republicans, from Bernie Sanders through J.D. Vance—a supply-side progressive or supply-side Americanist coalition.

  • It is therefore time to snatch the baton back, and give it to the supply-side progressivist policy-politics core, and then grab as many people to run alongside that core in the race as we possibly can.

  • The Niskanen Center cannot be at the heart of the supply-side progressivist agenda because they are incrementalists and critics by nature.

  • The principal business of “Leftist” activists over the past five years really has been and continues to be to try to grease the skids for the return of neofascism—just as the principal business of Ralph Nader and Naderites in 2000 was to grease the skids for upper-class tax cuts, catastrophic financial deregulation, and forever wars.

  • &, as always, HEXAPODIA!

References:

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A Deepness in the Sky (Zones of Thought series Book 2)

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Noah Smith & Brad DeLong Record the Podcast We, at Least, Would Like to Listen to!; Aspirationally Bi-Weekly (Meaning Every Other Week); Aspirationally an hour...

Key Insights:

  • Someone is wrong on the internet! Specifically Brad… He needs to shape up and scrub his brain…

  • Back in the 2000s, Brad argued that the U.S. should over the next few generations try to pass the baton of world leadership to a prosperous, democratic, liberal China…

  • Back in the 2000s, Noah thought that Brad was wrong—he looked at the Chinese Communist Party, and he thought: communist parties do not do “coëxistence”…

  • Noah understands people with a limitless authoritarian desire for power—people like Trump, Xi, Putin, and in the reverse Abe—and the systems that nurture and promote them…

  • Why did Brad go wrong? Excessive reliance in the deep structures of his brain on the now 60-year-old Social Origins of Dictatorship and Democracy: Lord and Peasant in the Making of the Modern World.

  • Why did Brad go wrong? A failure to understand Lenin’s party of a new type as a bureaucratic-cultural organization…

  • Suggestions for what Brad DeLong should earn during his forthcoming stint in the reëducation camp are welcome…

  • &, as always, Hexapodia…

References:

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Noah Smith & Brad DeLong Record the Podcast We, at Least, Would Like to Listen to!; Aspirationally Bi-Weekly (Meaning Every Other Week); Aspirationally an hour...

Key Insights:

  • Vernor Vinge was one of the GOAT scifi authors—and he is also one of the most underrated…

  • That a squishy social-democratic leftie like Brad DeLong can derive so much insight and pleasure from the work of a hard-right libertarian like Vernor Vinge—for whom the New Deal Order is very close to being the Big Bad, and who sees FDR as a cousin of Sauron—creates great hope that there is a deeper layer of thought to which we all can contribute. The fact that Brad DeLong and Vernor Vinge get excited in similar ways is a universal force around which we can unite, and add to them H.G. Wells and Jules Verne…

  • The five things written by Vernor Vinge that Brad and Noah find most interesting are:

  • “The Coming Technological Singularity: How to Survive in the Post-Human Era”,

  • A Fire Upon the Deep,

  • A Deepness in the Sky,

  • “True Names”, &

  • Rainbows End…

  • We do not buy the Supermind Singularity: The world is not a game of chess in which the entity that can think 40 moves ahead will always easily trounce the entity that can only think 10 moves ahead, for time and chance happeneth to us all…

  • We do not buy the Supermind Singularity: Almost all human intelligence is not in individual brains, but is in the network. We are very smart as an anthology intelligence. Whatever true A.I.s we create will be much smarter when they are tied into the network as useful and cooperative parts of it—rather than sinister gods out on their own plotting plots…

  • We do not buy the Supermind Singularity: mind and technology amplification is as likely to be logistic as exponential or super-exponential…

  • The ultimate innovation in a society of abundance is the ability to control human personality and desire—and now we are back to the Buddha, and to Zeno, Kleanthes, Khrisippus, and Marcus Aurelius…

  • With the unfortunate asterisk that mind-hacking via messages and chemicals mean that such an ultimate innovation can be used for evil as well as good…

  • Addiction effects from gambling are not, in fact, a good analogy for destructive effects of social media as a malevolent attention-hacker…

  • Cyberspace is not what William Gibson and Neil Stephenson predicted.

But it rhymed. And mechanized warfare was not what H.G. Wells predicted.

But it rhymed. A lot of the stuff about AI that we see in science fiction will rhyme with whatever things are going to happen…

  • The Blight of A Fire Upon the Deep is a not-unreasonable metaphor for social media as propaganda intensifier…

  • We want the future of the Whole Earth Catalog and the early Wired, not of crypto grifts and ad-supported social media platforms…

  • Vernor Vinge’s ideas will be remembered—if only as important pieces of a historical discussion about why the Superintelligence Singularity road was not (or was) taken—as long as the Thrones of the Valar endure…

  • Noah Smith continues to spend too much time picking fights on Twitter…

  • &, as always, Hexapodia…

References:

Get full access to Brad DeLong's Grasping Reality at braddelong.substack.com/subscribe

The Collapse of Complex Societies (New Studies in Archaeology)
A Deepness in the Sky (Zones of Thought series Book 2)
Rainbows End: A Novel with One Foot in the Future
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In which Noah Smith & Brad DeLong wish Daron Acemoglu & Simon Johnson had written a very different book than their "Power & Progress" is...

Key Insights:

  • Acemoglu & Johnson should have written a very different book—one about how some technologies complement and others substitute for labor, and it is very important to maximize the first.

  • Neither Noah Smith nor Brad DeLong is at all comfortable with “power” as a category in economics other than as the ability to credibly threaten to commit violence or theft.

  • Acemoglu & Robinson’s Why Nations Fail is a truly great book. Power & Progress is not.

  • We should not confuse James Robinson with Simon Johnson

  • Billionaires running oligopolistic tech firms are not trustworthy stewards of the future of our economy.

  • The IBM 701 Defense Calculator of 1953 is rather cool.

  • The lurkers agree with Noah Smith in the DMs.

  • The power loom caused technological unemployment because the rest of the value chain—cotton growing, spinning, and garment-making—was rigid, hence the elasticity of demand for the transformation thread → cloth was low.

  • We need more examples of bad technologies than the cotton gin and the Roman Empire.

References:

@MITSloan’s Simon Johnson…” Twitter. October 9. https://twitter.com/BESI_Berkeley/status/1711541113738387874.

  • DeLong, J. Bradford. 2024. “What To Do About the Dependence of the Form Progress Takes on Power?: Quick Takes on Acemoglu & Johnson's "Power & Progress”. Grasping Reality. February 29.

  • DeLong, J. Bradford; & Noah Smith. 2023. “We Cannot Tell in Advance Which Technologies Are Labor-Augmenting & Which Are Labor-Replacing”. Hexapodia. XLIX, July 7.

  • Gruber, Jonathan, & Simon Johnson. 2019. Jump-Starting America: How Breakthrough Science Can Revive Economic Growth and the American Dream.

The book is available on the Internet Archive: https://archive.org/details/e-20190429.

+, of course:

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Producer Confidence & Consumer Confidence (in the Economy), & Our Confidence (in Our Analyses): Noah Smith & Brad DeLong Record the Podcast We, at Least, Would Like to Listen to!; Aspirationally Bi-Weekly (Meaning Every Other Week); Aspirationally an hour...

Key Insights:

  • The disjunction between all the economic data having been very good and very strong for the past year and tons of reports and commentary about how people “weren’t feeling it” is mostly the result of the fact that things work with lags.

  • There are other factors: partisan politics, and the insistence of Republicans that they must not only vote but also at least say that they agree with their tribe.

  • There are other factors: the old journalistic adage that “what bleeds, leads”, exponentiated by the effects of our current short attention-span clickbait culture.

  • There are other factors: journalists, commentators, and the rest of the shouting class are depressed as their industries collapse around them, and somewhat of their situation leaks through.

  • There are other factors: while people think they personally are doing well, they do remember stories of others not doing wellm and are concerned.

  • But mostly it was just that things operate with lags: that was the major source of the “vibecession” gloom-and-doom which was at sharp variance with the actual economic dataflow.

  • We are not the modelers: we are, rather, the agents in the model.

  • The metanarrative is always harder than the narrative: trying to answer “why don’t people say they think the economy is good?” is very hard to answer in a non-stupid way, and most of us are much better off just saying: “hey, guys, the economy is really good!”

  • It is good to be long reality—as long as you are not so leveraged that your position gets sold out from under you before the market marks itself to reality,.

  • Lags gotta lag.

  • And, finally, hexapodia!

References:

On more than a dozen measures of relative prosperity, he’s outperformed the last six of his seven predecessors. On reducing the budget deficit, he has no peers”. Bloomberg, November 8.

+, of course:

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& a start-of-the-semester academic-email-addresses-only paid-subscription sale:

Key Insights:

  • Young whippersnappers Oks and Williams are to be commended for being young, and whippersnapperish—but we disagree with them.

  • Contrary to what Brad thought, the fertility transition in Africa really has resumed.

  • The problem of how you provide mass employment for people is different than the problem of how you increase your economy’s productivity by building knowledge capital, infrastructure, and other forms of human capital.

  • It is important to keep those straight and distinguished in your mind.

  • Commodity exporting should be viewed as a distinct development strategy from industrialization, and indeed from everything else.

  • Sometime during the plague, Brad DeLong really did turn into a grumpy old man yelling at clouds. It's time that he should own that.

  • People should take another look at the pace of South and Southeast Asian economic development. It is a very different world than it was 25 years ago.

  • Thus if you are basing your view on memories of or on books written based on memories of how things were 25 years ago, you are going to get it wrong. BIGTIME wrong.

  • Only the Federal Reserve can get away with saying “it’s context dependent”. All the rest of us have to put forward Grand Narratives—false as they all are—if we want to actually be useful.

  • Hexapodia

References:

+, of course:

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Key Insights:

  • Finally, at long last, over the next two generations the tide is likely to be flowing strongly toward near-universal global development...

  • The fear was that dehyperglobalization would rob poorer countries of their ability to develop the export comparative advantages to support the manufacturing engineering clusters they need for learning by doing, establishing a good educational system, and converging to global North standards of living...

  • This fear appears to have been very overblown...

  • Optimism about future income growth and globalization is warranted because India has more people in it than Africa: the Asia Circle from Japan to Pakistan and down to Indonesia and up to Mongolia is and always has been half the human race. And South Asia and Southeast Asia are now in gear...

  • As long as dealing with global warming does not absorb too many of the resources that could otherwise be devoted to income growth...

  • This is true even though the great wave of increasing international trade intensity and integration that began in 1945 came to an end in 2008...

  • Even so, since 2008 there has still been increasing global integration in the flow of ideas and the growing interdependence of value chains...

  • A substantial part of the post-2008 reversal of globalization was partially due to China onshoring its supply chains—the pre-2008 situation in which China's manufacturing knowledge was vastly behind its manufacturing intensity was highly unstable...

  • This, however, hinges sufficient state capacity—which is not just the ability to do infrastructure and reorganize your economy, but also have people's stuff not get stolen from them either by local thieves or by government functionaries...

  • Distributional issues are another potential key blockage—the benefits of technological change flow to the global north, or to a small predatory internal élite, or the market economy's distribution goes spontaneously awry...

  • But there is the question of how much distribution matters in a rich world where few are starving—matters for social power, yes, and for whatever happinesses flow from that, but does distribution matter otherwise?

  • Countries in the Middle East, Africa, and Latin America may be stubborn development problems for generations, however...

  • That beside, the basic mission of industrialization to uplift the human world out of poverty is likely to be complete by 2050 if we are lucky, by 2100 if we are not...

  • There is good reason to think that the next generation will be for the world better and more impressive than the last generation. And the last generation was, on a world scale, you know, better and more impressive than was the post-WWII Thirty Glorious Years in the North Atlantic...

  • Future guests, possibly?: Dietz Vollrath, Arvind Subramanian, Charlie Stross...

  • Hexapodia!

References:

+, of course:

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The SubStackLand community gains another valuable member. We welcome him to the NFL SubStackLand:

Key Insights:

  • Bing-AI says “Brian Beutler” is pronounced “Bryan Bootler”—that is, rhymes with “lion shooter”, which shows how far political incorrectness has penetrated Silicon Valley…

  • Noah has figured out a solution to his problem of losing the screws to his microphone stand: duct tape…

  • This started with Brad poking Brian on his belief there was a golden age of comity, common purpose, and energy in the left-of-center political sphere back in 2005 to 2008—saying that this misconceived as all mourning for a lost golden age is misconceived…

  • Noah and Brad today welcome Brian to SubStackLand, he having just created a substack and done 16 substantive posts in two weeks, which is a trult amazing rate of production…

  • Brian’s key insight is that since the start of 2019 Democrats have been amazingly, alarmingly, disappointingly timid in not aggressively going after every corner of TrumpWorld for its corruption, and doing so again and again and again…

  • Brian is, in a sense, the quantum-mechanical antiparticle to some combination of Matt Yglesias and David Schor…

  • Brian believes he coined the term “popularism”…

  • Back in 2005-2008 nobody said that Nancy Pelosi and Harry Reid were sabotaging their own party by encouraging Barack Obama to run in the primaries…

  • Judging by results, the current strategy of the Democratic Establishment is doing rather well: a plus three standard-deviation outcome in the 2022 midterms, for example…

  • That midterm result may be because, by our count no fewer than seven of the nine justices had assured senators that Roe v. Wade was “settled law”. And four of those seven then voted to overturn it in Dobbs…

  • Biden really cares about safeguarding democracy, and his actions should all be viewed with that in mind…

  • Hexapodia!

References:

  • Brian Beutler: Off Message SubStack https://offmessage.net/

  • Scattered Thoughts On Israel, Hamas, Gaza, And Related Matters: A possibly ill-advised post

  • VIDEO: How Trump Normalization Really Works: Why the political media slept on Trump's call for Mark Milley's death and other baffling decisions

  • Charts To A Gun Fight: How the Fighting Democrats of 2007 became the timid, focus-grouped party of today.

  • Trump Reaches A Fateful Crossroads: We should welcome it, but acknowledge the peril

  • Thursday Thread And AMA: Kind of a lot's happened since the last one

  • "The Most Important Issue In Our Politics": A Q&A with John Harwood on his interview with Joe Biden about threats to democracy

  • Five Thoughts On Karmic McCarthy: For now, we schadenfreude

  • VIDEO: How Profit Motive Distorts The News: And why liberals and Democrats should talk about it

  • The Era Of Hostage Taking And Small Ransoms: Republicans made Ukraine aid the price of avoiding a shutdown. Where does it end?

  • The Democrats' Lost September: You guys awake?

  • Breaking Down The GOP Debate: Reaction chats with Matthew Yglesias and Crooked Media's What A Day podcast

  • Wednesday Debate Thread: Let's watch Republicans be weird and scary together!

  • Baggage Check: Life disclosures, so readers can know me, and where I come from, a little better

  • VIDEO: Why The News Struggles To Say Republicans Are Responsible For The Government Shutdown: And why the public is likely to catch on anyhow

  • Biden Should Work The Media Refs On Impeachment: Everyone knows the impeachment is b.s., so he should say that

  • Welcome to Off Message: Refuge from a world gone mad

  • Thomas Babington Macaulay: Horatius at the Bridge https://englishverse.com/poems/horatius

  • Plutarch: Life of Tiberius Gracchus https://penelope.uchicago.edu/Thayer/E/Roman/Texts/Plutarch/Lives/Tiberius_Gracchus*.html

+, of course:

Lost Past Golden Ages:

Thomas Babington Macaulay: Horatius at the Bridge:

‘[Then] Romans in Rome’s quarrel Spared neither land nor gold, Nor son nor wife, nor limb nor life, In the brave days of old.Then none was for a party; Then all were for the state;Then the great man helped the poor, And the poor man loved the great:Then lands were fairly portioned; Then spoils were fairly sold:The Romans were like brothers In the brave days of old.

Now Roman is to Roman More hateful than a foe,And the Tribunes beard the high, And the Fathers grind the low.As we wax hot in faction, In battle we wax cold:Wherefore men fight not as they fought In the brave days of old…

Plutarch: Life of Tiberius Gracchus: ‘Formerly the senate itself, out of goodwill, conceded many things to the people, and referred many things to them for deliberation; and the magistrates themselves, even when they had no need of the people, summoned them to assemblies, and communicated with them on public affairs, not wishing them to feel that they were excluded from anything or insulted. But after the people had made the authority of the tribunes too great, and through them had tasted arbitrary power, then indeed there was no longer any room for deference or concession on the part of the senate; but they were forced to fight for everything as for a prize...

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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.

Background:

Key Insights:

  • 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:

  • successes…

  • 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.

  • Hexapodia!

References:

  • 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:

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Key Insights:

  • 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…

  • Hexapodia!

References:

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  • 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!

References:

  • 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 success of Chicago economists’ rhetoric…. Elite US policy schools… have by and large converged on a framework derived from a watered down version of neoclassical economics…. New skills, including but not limited to network science, material science and engineering, and use of machine learning would be one useful contribution towards solving the new knowledge problem…

  • Rana Foroohar: New rules for business in a post-neoliberal world: ‘“Reimagining the Economy”… by economists Dani Rodrik and Gordon Hanson…. The Roosevelt Institute… progressive politicos (many from within the administration) gathered to discuss the details of America’s industrial policy… the opposite of trickle-down…

  • Andy Haldane: The global industrial arms race is just what we need: ‘Manufacturing is undergoing a revival around the world…. An arms race to invest in decarbonising technologies is in fact exactly what the world needs to tackle two global externalities—the climate crisis and the investment drought…

  • Greg Ip: This Part of Bidenomics Needs More Economics: Massive sums are being spent on industrial policy with little guidance from economic theory or research…

  • Réka Juhász & al.: The Who, What, When, and How of Industrial Policy: A Text-Based Approach: ‘We create an automated classification algorithm and categorize policies from a global database…

  • Ezra Klein & Robinson Meyer: Biden’s Anti-Global Warming Industrial Policy After One Year…

  • Anne O. Krueger: Why Is America Undercutting Japan?: ‘United States… wasteful, inefficient industrial policies…. The Inflation Reduction Act (IRA) and the CHIPS and Science Act… directly threaten the Japanese economy (and many other US “friends”)…

  • Paul Krugman: ‘I guess I shouldn't be surprised that there's pushback against the observation of a Biden manufacturing boom…. The usual suspects claimed that a green energy transition would require huge economic sacrifice. Seeing this much investment in response to subsidies that are still only a fraction of 1% of GDP suggests otherwise…

  • Nathaniel Lane & Rék Juhász: Economics Must Catch Up on Industrial Policy: ‘Industrial policy… is back in a big way…. Governments are trying to improve the performance of key business sectors. Can they manage to do so without subverting competition and subsidizing special interests?…

  • Dani Rodrik:An Industrial Policy for Good Jobs: ‘A modern approach to industrial policy must… target “good-jobs externalities,” in addition to the traditional learning, technological, and national security considerations…

  • Noah Smith: ‘David Dayen and Marshall Steinbaum completely misrepresented Ezra Klein's "supply-side liberal" position. This is not good faith debate at all…

  • Noah Smith: ‘Oh, and notice that this framing [from David Dayen]—“The claim made here is that the dumb U.S. workforce fell behind, and now TSMC has to make up for it with Taiwanese workers…”—treats job skills as a test of inborn IQ, rather than something that has to be learned and taught. Wild…

  • Noah Smith: ‘Neoliberalism: a thread…. Markets as the fundamental generators of prosperity, and government as the way to distribute that prosperity more equitably…. Government can't shoulder the entire burden…. We need additional, quasi-independent institutions, like unions…. Industrial policy is underrated, both at the national and the local level. Neoliberalism under-emphasizes science policy, for example. I want a Big Push for science-driven growth…. Can the government "pick winners"? Yes. The government must pick winners. Green energy and other zero-carbon technologies being chief among the things we must pick…

  • Michael Spence: In Defense of Industrial Policy: ‘The real question is not whether industrial policy is worth pursuing, but how to do it well…

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Key Insights:

  • 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.

  • Rick Perlstein’s theory: we are replaying the 1970s:

  • 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…

  • Hexapodia!

References:

  • 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 over whether disinflation requires a large bulge in unemployment is essentially over. No, it doesn’t. But there’s still a debate about how we did this, which matters. One story is that disinflation reflects economic normalization—recombobulation after the disruptions of the pandemic. The other is that we’ve been sliding down a highly nonlinear Phillips curve, which is nearly vertical in a tight labor market. Why this matters: the economy is looking very strong. Atlanta GDPnow at 4.1%! If the Phillips curve is very steep, this could mean reaccelerating inflation. If we’re mostly seeing an end to pandemic disruptions, that risk is lower. Not the risks we thought we’d be facing!…

  • Project Syndicate: The Long Life of Inflation https://www.project-syndicate.org/onpoint/the-long-life-of-inflation: ‘Michael R. Strain… [says] “underlying inflation is still double the Fed’s target” and “financial conditions aren’t tightening as much as people assume.”… [The Fed] should continue to raise rates until “there is clear evidence that core inflation is on a path to its 2% target,” even if that makes recession more likely. Mario I. Blejer… and Piroska Nagy Mohácsi… also see serious risks… “distorted incentives and massive inherited imbalances”—fueled partly by populist governance and central-bank interventionism—“any celebration of progress in combating inflation must be cautious indeed.”… Jeffrey Frankel… [says] “inflation need not reach 2% immediately.” By “stabilizing inflation at 3–4%, with 2% as a longer-term goal,” the Fed can avoid “the social costs of a serious contraction.”… “There is no way, under any theory or precedent, that rate hikes beginning in January 2022 could have knocked back inflation by July of the same year,” argues James K. Galbraith…. Current macroeconomic conditions warrant the opposite response: not just “cutting interest rates,” but also “strengthening fiscal support for household incomes and well-paying jobs”…

  • Kyla Scanlon: Why Do People Think the Economy is Bad?: ‘ 'Genuine answer to a genuine question.... It's all convoluted and loud... and therefore, overwhelming, which creates a sort of mental-checking-out.... I don't want to be all frothy mouth "mainstream media bad" but... there is some stuff to say about coverage.... Lack of safety... stems from general fears over the future that haunt pretty much every generation. The plans are eroding.... Uncertainty around mortgage rates. It's the building blocks of inequality, lack of ownership either of land or a home, lack of community, etc etc.... Soft and hard data has diverged wildly...

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Key Insights:

  • 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.

  • Hexapodia!

References:

  • 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

https://www.epi.org/publication/the-zombie-robot-argument-lurches-on-there-is-no-evidence-that-automation-leads-to-joblessness-or-inequality/

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Key Insights:

  • 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” should delete their accounts and go away.

  • Hexapodia!!

References:

  • Erich Auerbach: Mimesis

  • Cicero: In Catalinam I

  • Brad DeLong: Þe Late-Antiquity Pause, & þe “Bright Ages!”

  • Brad DeLong: Yes. Rome Did Fall

  • Matthew Gabriele & David M. Perry: You Gotta Do the Reading, Man

  • Gregory of Tours: History of the Franks

  • Ernest Hemingway: A Farewell to Arms

  • Willem Jongman: Gibbon Was Right

  • Willem Jongman: The new economic history of the Roman Empire

  • Willem Jongman & al..: Health and wealth in the Roman Empire

  • Noah Smith: Was there such a thing as a “Dark Age” in Europe?

  • Noah Smith: Why didn’t they write anything down?

  • Ronald Syme: Tacitus

  • Tacitus: Annals of Imperial Rome

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Key Insights:

  • The global trade network is immensely valuable…

  • Friendshoring is not deglobalization, but raher shift-globlization…

  • Brad was stupid in 2005 in thinking “passing the baton of hegemony” constructively and progressively was a possibility…

  • Countries have no gratitude, and only remember what is convenient…

  • William James sought for “the moral equivalent of war” to mobilize civilizational energies for good and progress; and a Cold War certainly counts…

  • As Zhou Enlai said on similar issues: “it is too soon to tell”…

  • We both hope that America and China will soon be friends again—but the balloon freakout makes us pessimistic…

  • Hexapodia!!

References:

  • Sophia Ankel: China flew spy balloons over the US while Trump was president, but nobody realized until after he left office, reports say…

  • Steve Clemons: 🟡 The red balloon…

  • Damon Linker: America the Unserious…

  • Noah Smith: China's industrial policy has mostly been a flop…

  • Noah Smith: Three books about the technology wars…

  • Noah Smith: Friend-shoring vs. "Buy American"…

  • Noah Smith: You are now living through Cold War 2…

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Key Insights:

  • Yes, it is possible to talk about everything in an hour…

  • We are not very far apart on what the Fed is doing and should be doing—there is only a 100 basis-point disagreement…

  • Miles would be 100% right about the proper stance of monetary policy if he were in control of the Fed…

  • Miles is not in control of the Fed…

  • Thus Brad thinks that asymmetric risks strongly militate for pausing for six months, and then moving rapidly…

  • Smart people need to think much more about how to increase love…

  • Remember Robot Tarktil!

  • Noah Smith’s mother is a good friend of “Murderbot” author Martha Wells…

  • Hexapodia!!

References:

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Key Insights:

  • Information really wants to be free—if it is not free, if it is “charged for” by advertising, or otherwise, you will get into a world of hurt.

  • In the information age the capitalist mode of production has become a fetter on economic development and human flourishing: Friedrich Engels was right.

  • We need free public-funded Mastodon < servers for everyone.

  • No! We don’t!

  • We need John back in the future, to talk about: (a) the euthanasia of the rentier, what is misnamed “secular stagnation” and the coming of a capital-slack economy.

  • BitCoin, meme stocks, and so forth are a reflection of this capital-slack economy.

  • We need John back in the future, to talk about how Elon Musk is a walking, talking, ranting, tweeting meme stock in human form.

  • We need multiple measures of economic activity: never draw strong conclusions from only one.

  • Xi Jinping’s plan to shut down social media and have more people building semiconductors to put inside missiles and killer robots does not appear, so far, a great success.

  • The ratio of Google’s user value to its real factor cost is on the order of 20-to-1.

  • Google’s huge market power and profit rate powers the greatest AI-innovation engine in teh world today.

  • Hexapodia!

References:

  • Ralph Bakshi: Wizards…

  • Sean Carroll & John Quiggin: Interest Rates and the Information Economy…

  • Friedrich Engels: Socialism: Utopian & Scientific…

  • Google: Sankey Diagram for Google…

  • John Quiggin: Capitalism without capital doesn't work: The future of the information (non) economy…

  • John Quiggin: The Not‐So‐Strange Death of Multifactor Productivity Growth…

  • Chad Syverson: Challenges to Mismeasurement Explanations for the US Productivity Slowdown…

  • Wall Street Journal: GOOG | Alphabet Inc. Financial Statements…

  • Wikipedia: Mastodon…

  • Wikipedia: Hermetic Order of the Golden Dawn…

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Pre-Note:

Here in the U.S., at the leading edge of the world economy, measured producivity growth fell off a cliff in the late 1960s, recovreed somewhat in the 1980s, resumed what had been its “normal” pre-1970 pace in the 1990s with the dot-com boom—and then fell off a cliff again in the mid-2000s.

Did the neoliberal swing toward “short-termism”, viewing corporations as cash-flow engines and nothing else—plus the great reduction in public R&D and infrastructure spending—play a role in this? Perhaps. Maybe even probably.

Could and should we rebuild the corporate industrial research labs that atrophied, at least somewhat, during the neoliberal era? Perhaps. Maybe even probably.

Key Insights:

  • Sometimes the best things in history come from accidents and stupidity.

  • Collective stupidity enabling individual intelligence enables us to do unexpected things—sometimes very good things (and sometimes very bad things).

  • Because every institution has its own particular biases and limitations (as well as strengths), you need a diversity of institutions if you are going to achieve big goals.

  • The market ain't going to provide enough and the right kind of R&D—no single institution or set of institutions will.

  • The best we can do is to very amply fund as many kinds of R&D institutions as possible.

  • Hexapodia!

References:

  • Ashish Arora & al.: The Changing Structure of American Innovation: Some Cautionary Remarks for Economic Growth…

  • John Gertner: The Idea Factory: Bell Labs and the Great Age of American Innovation…

  • Iulia Georgescu: Bringing back the golden days of Bell Labs…

  • Ilan Gur: ‘Interested in bringing back Bell Labs? Some thoughts on why it's not possible, and what we should do instead…

  • Lawrence Lessig: Code 2.0…

  • Noah Smith: The dream of bringing back Bell Labs: Was America's most famous corporate lab a product of its time, or something that can be reproduced?…

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Pre-Note:

One thing we did not get into was the relationship between the claps of FTX and the associated fraud and “Effective Altruism”—Effective Altruism not so much as a philosophy, but rather as a doctrine preached by a life-coach.

If you want to have the highest chance of becoming rich, you make your bets as if you had a logarithmic utility function: if the downside to a bet cuts your wealth in half, you will not accept the bet unless the upside more than doubles your wealth. Accepting bets more risky than those that satisfy this Kelly Criterion, even though the gain exceeds the loss, will ultimately make you bankrupt and out of the game with very high probability and absolutely, filthy rich with very low probability.

Effective Altruism tells you not only that you can but that you are under the strongest moral obligation to make such riskier-than-Kelly positive expected-value bets. The question, then, is what you do when the overwhelmingly likely bankruptcy takes place. And then the answer is often: the customers money was just sitting there, so we can borrow it to successfully gamble for resurrection, and then pay it back soon.

Noah, however, is more cynical than I. He thinks there is a moderate chance that SBF, CE, and company are still very rich dudes indeed…

Key Insights:

  • Future hypothetical Web3 good, perhaps, if there ever is a use case…

  • Web3 as currently existing not good—a fraud opportunity and a strongly negative-sum arena for grifters and loosely-wrapped gamblers…

  • Being a greater fool and buying crypto—not good…

  • SBF & CE & company may well still be very rich dudes…

  • Trust Vitalik Buterin, probably—but perhaps Noah is himself subject to affinity fraud…

  • Hexapodia!

References:

(Best to read these in order!)

  • Tracy Alloway & al.: Transcript: Sam Bankman-Fried and Matt Levine on How to Make Money in Crypto…

  • Sam Trabucco (from April 2021): ‘Two years ago, Alameda maintained pretty strict delta neutrality…

  • Adam Fisher:Sam Bankman-Fried Has a Savior Complex—And Maybe You Should Too

  • Adam Cochrane: This was a crime plain and simple…

  • Tyler Cowen: A simple point about existential risk

  • Matt Levine: FTX's Balance Sheet Was Bad...

  • Byrne Hobart:Money, Credit, Trust, and FTX…

  • @0xfbifemboy: What Happened at Alameda Research…

  • Patrick Wyman: The Verge: Renaissance, Reformation, & 40 Years That Shook the World…

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Key Insights:

Since 1870, we humans have done amazingly astonishingly uniquely and unprecedentedly well at baking a sufficiently large economic pie.

But the problems of slicing and tasting the pie—of equitably distributing it, and then using our technological powers to live lives wisely and well—continue to flummox us.

The big reason we have been unable to build social institutions for equitably slicing and then properly tasting our now more-than-sufficiently-large economic pie is the sheer pace of economic transformation.

Since 1870 humanity's technological competence has doubled every generation

Hence Schumpeterian creative destruction has taken hold.

Our immensely increasing wealth has come at the price of the repeated destruction of industries, occupations, livelihoods, and communities.

And we have been frantically trying to rewrite the sociological code running on top of our rapidly changing forces-of-production hardware

The attempts to cobble together a sorta-running sociological software code have been a scorched-earth war between two factions.

Faction 1: followers of Friedrich von Hayek, who say: "the market giveth, the market taketh away: blessed be the name of the market"

Faction 2: followers of Karl Polanyi, who say: "the market was made for man; not man for the market"

Let the market start destroying "society", and society will react by trying to destroy the market order

Thus the task of governance and politics is to try to manage and perhaps one day supersede this dilemma.

&, of course, HEXAPODIA!!

Thank you for reading Brad DeLong's Grasping Reality. This post is public so feel free to share it.

References:

J. Bradford DeLong: Slouching Towards Utopia: An Economic History of the 20th Century

Robert Gordon: The Rise and Fall of American Growth https://archive.org/details/risefallofameric0000gord_w5w7

Gary Gerstle: The Rise and Fall of the Neoliberal Order: America and the World in the Free Market Era https://www.google.com/books/edition/The_Rise_and_Fall_of_the_Neoliberal_Orde/3PJbEAAAQBAJ

Vaclav Smil: Creating the 20th Century: Technical Innovations of 1867-1914 and Their Lasting Impact https://www.google.com/books/edition/Creating_the_Twentieth_Century/h78TDAAAQBA

Vaclav Smil: Transforming the 20th Century: Technical Innovations and Their Consequences https://archive.org/details/transformingtwen0000smil/

Friedrich von Hayek: The Road to Serfdom https://archive.org/details/in.ernet.dli.2015.97402

Karl Polanyi: The Great Transfomation: The Political and Economic Origins of Our Time https://archive.org/details/greattransformat0000pola_o9l4

John Maynard Keynes: The General Theory of Employment, Interest and Money https://archive.org/details/in.ernet.dli.2015.50092

+, of course:

Vernor Vinge: A Fire Upon the Deep https://archive.org/details/fireupondeep00ving_0/mode/1up

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Key Insights:

The only way to buy insurance against the fiscal theory of the price level’s becoming relevant for the inflation outlook is to keep Trump and Trumpists out of office

We have one political party that could well, someday, turn us inflation-wise into “Argentina”: the Republicans.

But thankfully we have only one such political party.

Democrats need to develop a policy framework for a time of inflation: capacity-building progressivism.

We do not yet know whether what the Fed has done is sufficient to return inflation to its 2%/year Core PCE target.

If the Fed overdoes inflation fighting, we might well find ourselves back at the zero lower bound on interest rates—and that would be a hell of a mess, much worse than having Core PCE inflation at 5%/year for an extra year or so.

Hexapodia!

References:

Olivier Blanchard: Inflation and unemployment. Where is the US economy heading? (August 8, 2022 1:30 PM)

Olivier Blanchard, Alex Domash, and Lawrence H. Summers: The Fed is wrong: Lower inflation is unlikely without raising unemployment (August 1, 23022 11:15 AM)

Olivier Blanchard, Alex Domash, and Lawrence H. Summers: Bad news for the Fed from the Beveridge space (July 2022)

Olivier Blanchard, Romain Duval, Pierre-Olivier Gourinchas, Anna Stansbury, and Betsey Stevenson: Labor Market Tightness in Advanced Economies (March 31, 2022 1:00 PM

Olivier Blanchard: Why I worry about inflation, interest rates, and unemployment (March 14, 2022 1:45 PM)

+, of course:

Vernor Vinge: A Fire Upon the Deep https://archive.org/details/fireupondeep00ving_0/mode/1up

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Key Insights:

We should avoid the tendency to paint the past, nostalgically, as a golden age.

If we take the long view there is an overwhelming continuity in the immigrant experience.

The immigrant experience is a very positive story—both then and now.

There is great hope for positive change in our immigration system: comprehensive immigration reform is not a third rail in American politics.

Remember George Washington’s take on immigration: “The bosom of America is open to receive not only the Opulent and respected Stranger, but the oppressed and persecuted of all Nations and Religions; whom we shall welcome to a participation of all our rights and privileges, if by decency and propriety of conduct they appear to merit the enjoyment…”

There is a great deal right with America, but if we want to focus on what is wrong with America, look to intersectionality: what is happening to the sons of 1st-generation Caribbean-American immigrants?

Hexapodia!

References:

Ran Abramitzky & Leah Platt Boustan: Streets of Gold: America's Untold Story of Immigrant Success <https://www.amazon.com/Streets-Gold-Americas-Immigrant-Success/dp/1541797833>

Leah Platt Boustan: Competition in the Promised Land: Black Migrants in Northern Cities and Labor Markets https://www.amazon.com/dp/B01GP3POLU/
+, of course:

Vernor Vinge: A Fire Upon the Deep https://archive.org/details/fireupondeep00ving_0/mode/1up

Notes & Questions:

Americans vastly overestimate how many immigrants are in the country today. Americans guess 36% of the country is born abroad, whereas the real number is 14%.

The second biggest misconception is that immigrants nowadays are faring more poorly in the economy and are less likely to become American than immigrants 100 years ago. That is simply not true

Immigrants take steps to 'fit in' just as much today as they did in the past.

The children of Mexican parents do pretty well today! Even though they were raised at the 25th percentile in childhood, they reach the 50th percentile in adulthood on average. Compare that to the children of US-born white parents raised at the same point, who only reach the 46th percentile.

One of the main changes for Mexican immigrants in the 1980s and 1990s is that they settled in larger numbers away from "gateway" communities.

The children of poor Irish or Italian immigrant parents outperformed the children of poor US-born parents in the early 20th century; the same is true of the children of immigrants today—with the exception of the sons of 1st generation Caribbean-Americans.

Immigrants tended to settle in dynamic cities that provided opportunities both for themselves and for their kids. This makes sense: immigrants have already left home, often in pursuit of economic opportunity, so once they move to the US they are more willing to go where the opportunities are.

We suspect that educational differences between groups matter today. Immigrant families can pass along educational advantages to their children.

For kids in 1910 observed working in 1940, immigrants have lower levels of education than otherwise similar children of US-born parents, but yet they earn more. Why? Geography. Immigrants and their children lived in more dynamic locations (for example: in cities, and outside of the South).

Immigrants that people (somewhat disparagingly) call "low-skilled" are actually pretty selected: It takes a lot of bravery, motivation, and resourcefulness to pick up and move to a new country, especially without much money or connections or language skills.

What role did the Cold War and the Red Scare play in discouraging social movements and progressive legislation?

What were the effects of the early “computerized factory” on the labor market and on productivity?

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Key Insights:

Be pragmatic! Do what works! Reinforce success! Abandon failure!

CHIPS & IRA are only, at most, 1/4 of what we should be doing.

These are both very good things to do, as far as running a successful industrial policy is concerned.

Maybe there was something to Biden’s claims that he could lead congress after all.

Hexapodia!

References:

Matt Alt: Pure Invention: How Japan Made the Modern World https://www.amazon.com/dp/B07YJZYFTS

Stephen S. Cohen & J. Bradford DeLong (2016): Concrete Economics: The Hamiltonian Approach to Economic Policy (Cambridge: HBS Press, 978-1422189818) https://www.amazon.com/dp/B00O92Q6C6/

J. Bradford DeLong (2022): Slouching Towards Utopia: An Economic History of the 20th Century (New York: Basic Books, 978-0465019595) https://www.amazon.com/Economic-History-Twentieth-Century/dp/0465019595/ref=sr_1_1?crid=3U3XCUXOZ37HW

Chalmers Johnson (1982): MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925-1975 (Stanford: Stanford University Press, 978-0804712064) https://www.amazon.com/dp/0804712069/

W. David Marx (): Ametora: How Japan Saved American Style https://www.amazon.com/dp/B012271ONK

+, 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

Pure Invention: How Japan's Pop Culture Conquered the World
Concrete Economics: The Hamilton Approach to Economic Growth and Policy
Ametora: How Japan Saved American Style (BASIC BOOKS/PER)
None

View Details

Key Insights:

The most recent round of Tech elephants, rhinoceroses, unicorns, and spiny lizards—Netflix, Shopify, etc.—are very unlikely to payoff for those investors who stay on the ride to the very end.

That said, they were very much worth doing even if they never make their shareholders any money. The growth of communities of engineering, entrepreneurial, and organizational practice is a huge benefit for innovation and growth—and the overwhelming bulk of that becomes non-rival public knowledge, that nobody can make scarce and hence charge people through the nose for.

Having your rich and your superrich fund R&D for little return is not the worst thing to have happen.

The ideas behind “Web3”—an end to the walled-garden Web2 internet, with the useful parts of the social graph trustable and publicly accessible to anyone who wants to communicate—are great ones.

The ideas behind “Web2”—the clickbait-ad walled-gardens—are horrible. And it is not just Facebook and Twitter. Google and Amazon are manifestly less useful than they were a decade and a half ago. Why? Because using pixels to inform is less profitable than using them for selling ads, and the companies have decided to be evil.

Code is fundamental: a tech-finance drought is no reason not to learn to code. It is a reason to get a job working for a company that already has a real product, and, you know, profits.

At bottom, all of “crypto” is very familiar. It is taking out a map, drawing property lots boundaries on them, and then trying to sell those lots to people by telling them that the railroad is coming through. And in the end everyone will be very happy If the railroad does come through, and does not decide to build its river-crossing bridge ten miles north.

Hexapodia!

References:

Scott Chipolina & George Steer: The Terra/Luna Hall of Shame https://www.ft.com/content/40c06a4f-3586-40be-b5ad-b836b5dcdc0d

Brad DeLong: Tesla’s Valuation(s)

Brad DeLong: Wonders of þe Invisible Crypto World

Adam Ozimek: Think Bigger About Remote Work

Noah Smith: Meme Stocks & Bitcoin Will Not Redistribute Wealth: Financio-Populism Is Built on Dreams & Smoke

Noah Smith: Suddenly Startups Are Having Trouble Raising Money. Why?: ‘A Few Reasons for the Big VC Funding Crunch

Noah Smith: What Kind of Financial Asset Is Bitcoin?: Is It Money? Digital Gold? A Tech Stock? Recent Events Shed Some Light on The Question

Nicholas Weaver: Blockchains & Cryptocurrencies: Burn It With Fire https://www.ischool.berkeley.edu/files/blockchains-and-cryptocurrencies-burn-it-fire-nicholas-weaver

+, 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

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Key Insights:

Not so much key insights, as key questions: (a) What are the teams? (b) 1920, 1948, 1951, 1974, or 1980? (c) Are there any true members of Team Transitory left? (d) Who is on Team The-Fed-Has-Got-This? (e) Who is on Team Hit-the-Economy-on-the-Head-with-a-Brick? (f) What inflation rate do we want to support economic reopening? (g) What inflation rate do we want to support the sectoral rebalancing—towards goods production, & towards the deliverator economy? (h) How would expected inflation get embedded in the labor market without strong unions and multi-year contracts? (i) How would expected inflation get embedded in the labor market without it first showing up in out-year bond market breakevens?

With Putin’s invasion-of-Ukraine supply shock, Summers’s position looks a lot stronger

Near the zero-lower-bound, there is a high option value to waiting to raise

That optionality still seems to us, for the moment, to be the major consideration

Thus it is too early to hit the economy on the head with a brick—even the small 5%-interest-rates brick

But it is not too early for Jay Powell to furrow his brow and say that the Fed is considering Larry Summers’s arguments very carefully.

Noah Smith finds that he is much more in accord with Larry Summers than he thought he would be.

Larry and Ezra like Brad’s forthcoming Slouching Towards Utopia

Elon Musk should take over Twitter

Hexapodia!

Charts:

References:

J. Bradford DeLong (2022): Slouching Towards Utopia: An Economic History of the 20th Century (New York: Basic Books, 978-0465019595) https://www.amazon.com/Economic-History-Twentieth-Century/dp/0465019595/ref=sr_1_1?crid=3U3XCUXOZ37HW

J. Bradford DeLong: America’s Macroeconomic Outlook

Ezra Klein & Larry Summers: I Keep Hoping Larry Summers Is Wrong: What If He Isn’t?: The Ezra Klein Show https://www.nytimes.com/column/ezra-klein-podcast

Paul Krugman: High Inflation in the United States: Newsletter 2022-03-29 https://messaging-custom-newsletters.nytimes.com/template/oakv2?CCPAOptOut=true&emc=edit_pk_20220329&instance_id=57038&nl=paul-krugman

John Scalzi: The Kaiju Preservation Society https://www.amazon.com/Kaiju-Preservation-Society-John-Scalzi-ebook/dp/B0927B1P8L

Noah Smith: When Will the Fed Drop the Hammer?

Neal Stephenson: Snow Crash https://www.amazon.com/Snow-Crash-Novel-Neal-Stephenson-ebook/dp/B000FBJCJE

+, 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

Snow Crash
The Kaiju Preservation Society

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Key Insights:

There is a perspective from which “today” means “post-Ordovician”

Catul-Huyuk as 900 families living cheek-by-jowl, and after 1500 years… people leave…

Angkor’s uniquely vulnerable water reservoirs… and eventually… people leave…

Cahokia’s sophisticated organization of labor… but eventually… people leave…

Pompeii… well, we know why people flee all-of-a-sudden…

Cities are magical places, but not always, and not forever…

Cities suffer from abandonment when an overdetermined disaster hits a sclerotic system: you can deal with politics, you can deal with climate change by themselves, but…

Question: Will Detroit or Miami or Houston be the next “lost city” in the U.S.?

Hexapodia!

References:

Annalee Newitz: Four Lost Cities: A Secret History of the Urban Age (New York: W.W. Norton, 2021) https://www.google.com/books/edition/Four_Lost_Cities_A_Secret_History_of_the/l6K6DwAAQBAJ

Joseph Tainter: The Collapse of Complex Societies (Cambridge: Cambridge University Press, 1988) https://www.google.com/books/edition/The_Collapse_of_Complex_Societies/YdW5wSPJXIoC

+, of course:

Vernor Vinge: A Fire Upon the Deep (New York: Tor, 1992) https://archive.org/details/fireupondeep00ving_0/mode/1up

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We Truly Did Not Have History Rhyming to the Spanish Civil War on Our 2022 Bingo Card!…

Subscribe to get this in your email inbox. Become a paid subscriber if… I will not say that this ‘Stack will cease to exist without paying subscribers. I will say that the frequency of this ‘Stack depends on enough people being paying subscribers for me to feel under a sense of obligation to prioritize this, rather than something else. And I will say that the survival of our civilization may well depend on our reattaining a functional, rational public sphere—and that subscribing to ‘Stacks that you find useful may well be the most productive thing you can do to help make that happen

Thank you for reading Brad. Please share this with anyone who you think will find it useful.

Key Insights:

Putin’s decision to invade came as a great surprise to everyone.

The information flow to Putin is very bad, very low quality.

Muscovy, St. Petersburg, Novgorod, Minsk, Kyiv are all ‘Rus.

But the cultural, political, and linguistic differences between Kyivan and Muscovite ‘Rus are surprisingly deep, historically speaking.

Economic sanctions can do a lot to degrade Russia’s war-fighting machine, and should be used to do so.

Bounties and rewards for defectors and for the neutralization of equipment might be very effective, and should be promoted.

Countries and régimes run on myth, and military defeat is the most effective way that a pernicious myth gets destroyed.

Be afraid, be very afraid: Putin’s survival—his personal political, the causes he has invested his life in, and perhaps his mortal—depend on his “winning” in some sense.

If appeasement of Putin could be made to work, it might well be worth trying.

But it is highly unlikely that appeasement of Putin could be made to work.

Really-existing Putinite petro-kleptocracy looks worse than really-existing Brezhnevite socialism.

References:

ChinaTalk: Russia's Pivot to Asia From Czars to Putin

Kamil Galeev: Why Russia Will Lose

Kamil Galeev: Twitter https://twitter.com/kamilkazani

Wilson Center: Kamil Galeev https://www.wilsoncenter.org/person/kamil-galeev

+, of course:

Vernor Vinge: A Fire Upon the Deep https://archive.org/details/fireupondeep00ving_0/mode/1up

You can now read Brad DeLong's Grasping Reality in the new ‘Stack app for iPhone—but not (YET) Android.

The ‘Stack Communications Apparat says: “With the app, you’ll have a dedicated Inbox for my ‘Stack and any others you subscribe to. New posts will never get lost in your email filters, or stuck in spam. Longer posts will never cut-off by your email app. Comments and rich media will all work seamlessly. Overall, it’s a big upgrade to the reading experience. If you do not have an “Apple device”, you can join the Android waitlist here.”

I have been a beta tester for the iPhone ‘Stack app. The use case I have found for it is as a podcast player— using Apple's text-to-speech feature for ‘Stacks that do not have attached audio podcasts. It has, so far, been a very very good experience.

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Become a free subscriber to receive this ‘Stack in your email. Do note that this Grasping Reality newsletter is a reader-supported publication—I really would like to collect enough from it to hire an RA. So consider becoming a paid subscriber, please, if you find this project worthwhile and think it worth continuing:

Thanks for reading this. And please share it far and wide, if you think it worth reading…

Key Insights:

The Federal Reserve Act directly speaks of the importance of representation—that Governors come from different economic communities with different economic interests, and not be limited to monetary economists, financiers and bankers, and rich asset-heavy worthies. The African-American community—and, indeed, the gloal warming-worrying community—are fine communities to be represented by a Governor.

A former senior advisor to the Secretary of the T reasury for development and finance, a former senior economist at the Council of Economic Advisors who served as the point person on the European side of the Great Recession’s financial crisis, a tenured economics professor from a major state university in the Midwest and a former National Fellow at the Hoover Institution—there would be no Republican senatorial opposition to her from other than the ten wingnuttiest wingnuts were Lisa Cook not Black.

We—at least Brad—is thus more scared than he was about the Republican-conservative white racial panic that this backlash reveals: 400 years of guilt from the enforcement of white supremacy have led at least the people who speak for the Republican Party to fear a former Hoover Institution National Fellow as a mortal threat by reason of what they presume is her hyper-wokeness.

If Lisa Cook does not satisfy that Republican community, I cannot think of a single African-American who could.

We are in an era of unrest, in which people are stupid and very stupid things happen. This white backlash against Lisa Cook is just one of the many very, very stupid things happening at the moment.

This moment will pass: 10 years ago Lisa Cook’s nomination would not have generated a backlash; 10 years from now it would not generate a backlash.

At this moment in America our competence as a nation to do even the very simple things is heavily compromised by the racialized hyper-politicization of nearly every single thing.

Hexapodia!

References:

Lisa Cook: Statement Before the Committee on Banking, Housing, & Urban Affairs, United States Senate

Lisa Cook: Website https://lisadcook.net

Lisa Cook: Biography https://lisadcook.net/wp-content/uploads/2021/05/lisadcook_bio_short_0521.pdf

Lisa Cook: C.V. https://lisadcook.net/wp-content/uploads/2021/05/Revised-CV-PDF-Edits-0521.pdf

Lisa Cook: Violence and Economic Growth: Evidence from African American Patents, 1870- 1940 https://www.jstor.org/stable/44113425?seq=1

Amanda Terkel: Biden’s Federal Reserve Nominee Lisa Cook Is Facing A Racist Smear Campaign https://www.huffpost.com/entry/lisa-cook-federal-reserve-nominee-racist-criticism_n_61f367eee4b02de5f516fa2a

Olivier Blanchard: ‘I like Lisa Cook and believe she will be a very useful addition to the Board…

Nina Banks & al.: NEA Supports the Nominations of Drs. Cook and Jefferson to the Federal Reserve Board https://neaecon.org/nea-supports-the-nominations-of-drs-cook-and-jefferson-to-the-federal-reserve-board/

Brad DeLong: Lisa Cook Has Not Been Playing the Game of Life on Easy Mode…

Craig Torres & Daniel Flatley: Fed’s First Black Female Nominee Brings New Focus, Stirs GOP Ire https://news.bloomberglaw.com/daily-tax-report/feds-first-black-female-nominee-brings-new-focus-stirs-gop-ire

Paul Romer: Theories, Facts, and Lisa Cook https://paulromer.net/lisa-cook/

George F. Will: Biden Proposes Saddling an Already Struggling Federal Reserve with Two Political Activists https://www.washingtonpost.com/opinions/2022/01/28/two-political-activists-nominated-to-federal-reserve/

John Cochrane: Fed Nominees https://johnhcochrane.blogspot.com/2022/01/fed-nominees.html#more

Chris Brunet: Biden’s Fed Nominee Lisa Cook Criticized For Being Unqualified, Embellishing Resumehttps://dailycaller.com/2022/01/20/bidens-fed-nominee-lisa-cook-criticized-for-being-unqualified-embellishing-resume/

+, of course:

Vernor Vinge: A Fire Upon the Deep https://archive.org/details/fireupondeep00ving_0/mode/1up

Become a free subscriber to receive this ‘Stack in your email. Do note that this Grasping Reality newsletter is a reader-supported publication—I really would like to collect enough from it to hire an RA. So consider becoming a paid subscriber, please, if you find this project worthwhile and think it worth continuing:

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Become a free subscriber to receive this ‘Stack in your email. Do note that this Grasping Reality newsletter is a reader-supported publication—I really would like to collect enough from it to hire an RA. So consider becoming a paid subscriber, please, if you find this project worthwhile and think it worth continuing:

Thanks for reading this. And please share it far and wide, if you think it worth reading!

Key Insights:

Macro Policy Guiding Principle: prioritize full employment—make Say’s Law true in practice even though it is false in theory…

Macro Policy Guiding Principle: move the economy as fast as possible to what its long-term optimal structural configuration should be

Macro Policy Guiding Principle: Guiding principles (1) and (2) overrides desirability of immediate price stability…

We still have lots of room to run before we can say that the post-Volcker Fed has failed to meet its inflation target in an average-outcomes sense…

Time to panic about inflation will be when the bond market gets worried about it—but right now the bond market is very much “Fed has got this”…

Yet the political economy of the thing is overwhelmingly relevant: inflation that gets Biden booted from office would be very bad…

Even prolonged inflation may help—in that there is a lot of structural reform we need to do, and this may help us get it done…

Hexapodia!

John Maynard Keynes (1919): The Economic Consequences of the Peace https://archive.org/details/in.ernet.dli.2015.14117/page/n228/mode/1up?view=theater&q=lenin:

Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become "profiteers,", who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

In the latter stages of the war all the belligerent governments practised, from necessity or incompetence, what a Bolshevist might have done from design. Even now, when the war is over, most of them continue out of weakness the same malpractices. But further, the Governments of Europe, being many of them at this moment reckless in their methods as well as weak, seek to direct on to a class known as "profiteers" the popular indignation against the more obvious consequences of their vicious methods. These "profiteers" are, broadly speaking, the entrepreneur class of capitalists, that is to say, the active and constructive element in the whole capitalist society, who in a period of rapidly rising prices cannot help but get rich quick whether they wish it or desire it or not. If prices are continually rising, every trader who has purchased for stock or owns property and plant inevitably makes profits.

By directing hatred against this class, therefore, the European Governments are carrying a step further the fatal process which the subtle mind of Lenin had consciously conceived. The profiteers are a consequence and not a cause of rising prices. By combining a popular hatred of the class of entrepreneurs with the blow already given to social security by the violent and arbitrary disturbance of contract and of the established equilibrium of wealth which is the inevitable result of inflation, these Governments are fast rendering impossible a continuance of the social and economic order of the nineteenth century. But they have no plan for replacing it…

References:

William J. Baumol (1999): Retrospectives: Say’s Law https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.13.1.195

John Maynard Keynes (1919): The Economic Consequences of the Peace https://archive.org/details/in.ernet.dli.2015.14117/page/n228/mode/1up?view=theater&q=lenin

Paul Krugman (1998): It’s Baaack!: Japan's Slump & the Return of the LiquidityTrap https://www.brookings.edu/wp-content/uploads/1998/06/1998b_bpea_krugman_dominquez_rogoff.pdf

Paul Krugman (2018): It’s Baaack, Twenty Years Later https://www.gc.cuny.edu/CUNY_GC/media/LISCenter/pkrugman/Its-baaack.pdf

+, of course:

Vernor Vinge: A Fire Upon the Deep https://books.google.com/books?id=fCCWWgZ7d6UC

Become a free subscriber to receive this ‘Stack in your email. Do note that this Grasping Reality newsletter is a reader-supported publication—I really would like to collect enough from it to hire an RA. So consider becoming a paid subscriber, please, if you find this project worthwhile and think it worth continuing:

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Key Insights:

We may well face a generation of right-wing culture war-fueled minority rule in this country.

American Progressives have proven bad at making alliances with moderate conservatives—and at giving conservative voters reasons to vote for moderates.

Worry most about American national decline—which is happening anyway.

American exceptionalism and America as a “city upon a hill” for the world—that is gone. We are no longer a model to emulate, but a horrible warning of a society gone wrong.

The things that are real to progressives are fake: democracy is not going to be destroyed by the failure to pass the John Lewis voting rights act, but by state legislature-level nullification

The thngs that are real to Republicans are fake: what is being taught to students is not “critical race theory” but simply “history”, vaccines are not a plot to control us, and the 2020 election was not stolen.

The Republican b**t is more egregious, but progressive b*t is still bt. The saying both sides have b***t does not mean they are equivalent.

The best we can hope for is simple exhaustion on both sides.

But every time we try to get out, they pull us back in.

Hexapodia!

References:

Geoffrey Kabaservice: Rule & Ruin: the Downfall of Moderation & the destruction of the Republican Party, from Eisenhower to the Tea Party https://archive.org/details/ruleruindownfall0000kaba

Geoffrey Kabaservice: The Forever Grievance https://www.niskanencenter.org/op-ed-the-forever-grievance/

Geoffrey Kabaservice: Vital Center Podcast https://www.niskanencenter.org/the-vital-center-podcast/

Steve Levitzky & Dan Ziblatt: How Democracies Die: What History Reveals About Our Future https://archive.org/details/HowDemocraciesDieStevenLevitsky

William F. Buckley: God & Man at Yale: The Superstitions of Academic Freedom https://archive.org/details/godmanatyale0000unse

William F. Buckley & L. Brent Bozell: McCarthy & His Enemies: The Record & Its Meaning https://archive.org/details/mccarthyhisenemi00buck

Rick Perlstein: Before the Storm: Barry Goldwater & the Unmaking of the American Consensus https://archive.org/details/beforestormbarry0000perl_k0s0

Dwight D. Eisenhower: 1954 Letter to Edgar N. Eisenhower https://www.bradford-delong.com/2019/07/dwight-d-eisenhower-1954-letter-to-edgar-newton-eisenhower-weekend-reading.html

+, of course:

Vernor Vinge: A Fire Upon the Deep https://books.google.com/books?id=fCCWWgZ7d6UC

Get full access to Brad DeLong's Grasping Reality at braddelong.substack.com/subscribe

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Key Insights:

Nearly all successful political movements over the past 150 years have been strongly nationalistic

A successful cosmopolitanism must therefore be a nationalistic cosmopolitanism—one that says your country is great because it learns from and has important things to teach other nations.

We—somewhat surprisingly—find ourselves endorsing and agreeing with Matthew Desmond’s claim that an important root of some facets of American capitalism is found on the plantation.

We endorse Sandy Darity and Darrick Hamilton’s calls for reparations,

We enthusiastically and positively give a shout-out to the highly patriotic Nikole Hannah Jones and her contention that the 1619 founding makes African-Americans the most quintessential representatives of the good side of American nationalism

You cannot be a real patriot if you do not care about dealing with your country’s flaws—Carl Shurz: “My country, right or wrong; if right, to be kept right; and if wrong, to be set right!”

Wokeness is 21st century Puritan Protestantism—to build a City Upon a Hill and become a Light Unto the Nations, with a key part of that building composed of our confession that we are the unworthy who must place our hearts on the altar of and tremble before the Almighty .

It is important to mean it: to repent, to take responsibility, to not just say that America owes reparations, but to work to make America pay what it owes.

This podcast appears to be our version of: Three strongly patriotic white guys stand up for ‘Murka!

Hexapodia!

References:

Ed Baptist: The Half Has Never Been Told: Slavery & the Making of American Capitalism https://www.google.com/books/edition/The_Half_Has_Never_Been_Told/dSrXCwAAQBAJ

Trevor Burnard: Edward Baptist, Slavery and Capitalism http://trevorburnard.com/wordpress/?p=30Matthew Desmond: In Order to Understand the Brutality of American Capitalism, You Have to Start on the Plantation https://www.nytimes.com/interactive/2019/08/14/magazine/slavery-capitalism.html

John J. Clegg: Capitalism and Slavery https://www.jstor.org/stable/10.1086/683036

Nikole Hannah Jones: Our Democracy’s Founding Ideals Were False When They Were Written. Black Americans Have Fought to Make Them True https://www.nytimes.com/interactive/2019/08/14/magazine/black-history-american-democracy.html

P.R. Lockhart & Ed Baptist: How Slavery Became America’s First Big Business https://www.vox.com/identities/2019/8/16/20806069/slavery-economy-capitalism-violence-cotton-edward-baptist

Alan L. Olmstead & Paul W. Rhode: Cotton, Slavery, & the New History of Capitalism https://web.law.columbia.edu/sites/default/files/microsites/law-economics-studies/olmstead_-_cotton_slavery_and_history_of_new_capitalism_131_nhc_28_sept_2016.pdf

Ernst Renan: What Is a Nation? https://web.archive.org/web/20110827065548/http://www.cooper.edu/humanities/core/hss3/e_renan.html

+, of course:

Vernor Vinge: A Fire Upon the Deep https://books.google.com/books?id=fCCWWgZ7d6UC

Get full access to Brad DeLong's Grasping Reality at braddelong.substack.com/subscribe

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Key Insights:

Matt Suandi—forced off of his India RCT development-economics project by the COVID plague—has taken the plague year to write a brilliant paper: Matthew Suandi: Promoting to Opportunity: Evidence and Implications from the U.S. Submarine Service https://static1.squarespace.com/static/615a18f283700f2629a58019/t/618ace007764e35a1b3f0176/1636486691263/MatthewSuandi_JMP_Nov_21_Berkeley.pdf

In the early stages of the Pacific War, whether a US submarine-launched torpedo exploded was a matter of luck.

If a submarine captain had an enlisted man marked out for promotion, those promotions happened much more often if the submarine returned from its cruise having succeeded in sinking ships.

Those promoted because they happened to be on lucky submarines with torpedoes that exploded lived 2.4 years longer than their counterparts who happened to be on unlucky submarines and were not promoted.

Those promoted because they happened to be on lucky submarines with torpedoes that exploded are recorded as having a last known address in a zip code with housing prices higher by 7 percentiles than their counterparts who happened to be on unlucky submarines and were not promoted.

Early promotion to a job with more responsibility and scope—at least in the WWII-era USN—shapes your life to a remarkable degree by giving you scope to develop and exercise your talents.

If the WWII-era USN is typical, we waste huge amounts of human potential by not giving people workplace opportunities to show what they can learn to do.

Equality isn’t just about money: it is about scope for action, about developing and exercising talents, and about receiving external validation.

A good society would give people much more opportunity to discover how big a deal they are and can become, and remind them of this at every opportunity.

It is very, very important to conduct realistic live-fire tests under realistic conditions

Hexapodia!

References:

Matthew Suandi: Promoting to Opportunity: Evidence and Implications from the U.S. Submarine Service https://static1.squarespace.com/static/615a18f283700f2629a58019/t/618ace007764e35a1b3f0176/1636486691263/MatthewSuandi_JMP_Nov_21_Berkeley.pdf

Dud Torpedoes of World War II http://www.ww2pacific.com/torpedo.html

Ian Toll: Pacific Crucible: War at Sea in the Pacific, 1941-1942, The Conquering Tide: War in the Pacific Islands, 1942-1944, Twilight of the Gods: War in the Western Pacific, 1944-1945

Herman Wouk: The Winds of War https://www.amazon.com/Winds-War-Herman-Wouk/dp/0316952664/, War & Remembrance https://archive.org/details/warremembrancewwouk00wouk

Anthony Newpower: Iron Men and Tin Fish: The Race to Build a Better Torpedo during World War II https://www.amazon.com/Iron-Men-Tin-Fish-Technology/dp/027599032X/

+, of course:

Vernor Vinge: A Fire Upon the Deep https://books.google.com/books?id=fCCWWgZ7d6UC

Get full access to Brad DeLong's Grasping Reality at braddelong.substack.com/subscribe

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Key Insights:

Paul Feyerabend was right—science is whatever scientists do: anything goes. But what healthy sciences that survive and flourish and good scientists do is put first and foremost discovering what actually is and making theories to understand reality. So Kuhn and Popper are also right.

Economics has not been much of a science. But this Card, Angrist, Imbens—and Krueger—Nobel Prize marks a very big possible improvement in this respect.

Keep at it! Keep doing your work no matter the brickbats, and you may, someday, look back and recognize that you have changed the world.

Pets are good: they drive you to “become the person your dog thinks you already are”.

Hexapodia!

References:

The London Economist has an excellent interview with two of our three Nobel Prize winners this year—David Card and Josh Angrist. If you want to know why we economists respect them so much and are cheering their Nobel Prizes so loudly, follow the link: Joshua Angrist, Ryan Avent, David Card, & Rachana Shanbhogue : A Real-World Revolution in Economics: ‘THIS YEAR’s Nobel prize celebrates the “credibility revolution” that has transformed economics since the 1990s. Today most notable new work is not theoretical but based on analysis of real-world data.... How their work has brought economics closer to real life…https://www.economist.com/nobelpod2021?utmcampaign=editorial-social&utmmedium=social-organic&utm_source=twitter

This is, I think, the best single thing to read about the Card, Angrist, Imbens Economics Nobel Prize: Noah Smith: The Econ Nobel We Were All Waiting for: ‘To predict who will win the Econ Nobel... list the most influential people in the field who haven’t won it yet.... Assume... micro theorists won’t win... two years in a row.... The ones whose influence is the oldest are the most likely to win.... For years, this method led lots of people—including me—to predict a Nobel for David Card. His 1994 paper with Alan Krueger on the minimum wage was a thunderbolt.... Since then, Card has been at the forefront of empirical labor.... Angrist and Imbens’ impact... though also high... came later.... I wouldn’t have been surprised had they won the prize in later years. But Card was clearly overdue. Perhaps the reason it took this long was that Card’s conclusions in his famous minimum wage paper were so hard for many in the field to swallow.… At the time, Card and Krueger’s finding seemed revolutionary and heretical. In fact, other researchers had probably been finding the same thing, but were afraid to publish their results, simply because of their terror of offending the orthodoxy...

Tim Noah: Tragedy Kept Alan Krueger From Claiming a Nobel Prize, but He’s Not Forgotten: ‘Paying tribute to the late economist who, with David Card, changed America’s mind about the minimum wage… https://newrepublic.com/article/163994/david-card-alan-krueger-nobel-prize

Get full access to Brad DeLong's Grasping Reality at braddelong.substack.com/subscribe

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Key Insights:

Yes, Americans are now in a selfish defensive crouch, but just wait 8 years—if we get a high-pressure economy for those years…

We are finally getting back to normal politics, in which we slag each other because some claim we can afford to spend $3.5 and others that we can only afford to spend $1.5 trillion. And that is a very good sign…

Hexapodia!

References:

Zach Carter: Why Are Moderates Trying to Blow Up Biden’s Centrist Economic Plan? https://www.nytimes.com/2021/09/22/opinion/biden-moderate-democrats.html

Jonathan Cohn: Why Manchin & Democratic Leaders Might Not Be Quite So Far Apart: https://www.huffpost.com/entry/manchin-build-back-better-tax-credits-prescription-drugs_n_6158c67ae4b099230d240578

Todd Gitlin: Look What’s Inside The Bill, Please: the Details of the $3.5 Trillion Package https://www.nydailynews.com/opinion/ny-oped-big-bills-huge-consequences-20211005

Robert Greenstein: Budget Rconciliation: Calling It a ‘$3.5 Trillion Spending Bill’ Isn’t Quite Right <https://thehill.com/opinion/campaign/570487-budget-reconciliation-calling-it-a-35-trillion-spending-bill-isnt-quite>

Steven M. Teles, Samuel Hammond, & Daniel Takash: Cost-Disease Socialism https://www.niskanencenter.org/wp-content/uploads/2021/09/Cost-Disease-Socialism.pdf

David Cay Johnston: How $3 a Day Can Buy America a Rich Future https://www.dcreport.org/2021/09/21/how-3-a-day-can-buy-america-a-rich-future/

Robert Kuttner: How the Budget Deal Could Make the Child Tax Credit Permanent https://prospect.org/blogs/tap/how-the-budget-deal-could-make-the-child-tax-credit-permanent/

Adam Jentleson: ‘Sinema’s approval rating has tanked, going from net +13 to 0 since the beginning of the year. But surely someone will be along soon to explain how actually this is brilliant politics…

Jeet Heer: Dune Bugs

+, of course:

Vernor Vinge: A Fire Upon the Deep https://books.google.com/books?id=fCCWWgZ7d6UC

Get full access to Brad DeLong's Grasping Reality at braddelong.substack.com/subscribe

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Key Insights:

I do not understand how the Chinese economy works.

The Chinese economy is an odd combination of market and party in which the party has enormous reach and control, but somehow that has not triggered the “soft budget constraint” problems of the Soviet model.

Financial constraints are not real—a government that wants to can evade them in its management of the economy.

Real resource constraints are, however real: finance does not bind because it is true that what we can do, we can afford; but it is also true that what we cannot do, we cannot afford.

You can hide for a while from real resource constraints by bubble-overvaluing the low-value infrastructure and real-estate investments that you are making, but you cannot run.

There is lots to read that is good; consult these show notes.

HEXAPODIA!!

References:

Robert Armstrong: The Real Risks from Evergrande: https://www.ft.com/content/f858fe4a-716e-49ee-bebe-45c810b0d7a6

Òscar Jordà, Moritz Schularick & Alan M. Taylor: The Great Mortgaging: Housing Finance, Crises, & Business Cycles https://www.nber.org/papers/w20501

Michael Pettis: What Does Evergrande Meltdown Mean for China? https://github.com/braddelong/public-files/blob/master/article-pettis-evergrande.pdf

Margaret Sutherlin: ‘Cash-strapped Chinese developer Evergrande missed payments… on Monday… https://www.bloomberg.com/news/newsletters/2021-09-21/bloomberg-s-evening-briefing-biden-s-un-debut-focused-on-climate-covid-crises

Girolamo Pandolfi da Casio ditto Carlo Dossi Erba: Evergrande

Ming Zhao: Evergrande’s Backstory

+, of course:

Vernor Vinge: A Fire Upon the Deep https://books.google.com/books?id=fCCWWgZ7d6UC

Get full access to Brad DeLong's Grasping Reality at braddelong.substack.com/subscribe

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Key Insights:

Today’s meaning of “neoliberalism” is the result of the collision of two different applications of the term—to Margaret Thatcher, and to the Washington Monthly…

Intermediary institutions are very suspicious to liberalism, at least in its pure form…

Liberalism has a bias toward atomizing solutions to social problems…

YIMBY vs. NIMBY is the fundamental political debate in America today…

Sometimes the answer will be command-and-control, sometimes the answer will be deregulation…

Yuval Levin is good…

Detach liberalism from centrism or moderation…

Liberals are thinking about things that are important and visionary about productivity, and Biden is listening…

Hexapodia!

References:

Sam Hammond: The Free-Market Welfare State: Preserving Dynamism in a Volatile World https://www.niskanencenter.org/wp-content/uploads/old_uploads/2018/04/Final_Free-Market-Welfare-State.pdf

Brink Lindsey: The Center Can Hold: Public Policy for an Age of Extremes https://www.niskanencenter.org/the-center-can-hold-public-policy-for-an-age-of-extremes/

Brink Lindsey & Steve Teles: The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, & Increase Inequality https://global.oup.com/academic/product/the-captured-economy-9780190627768

Niskanen Center: Faster Growth, Fairer Growth: Policies for a High Road, High Performance Economy https://www.niskanencenter.org/faster_fairer/agenda.html

Steve Teles, Samuel Hammond, & Daniel Takash: Cost Disease Socialism: How Subsidizing Costs While Restricting Supply Drives America’s Fiscal Imbalance https://www.niskanencenter.org/cost-disease-socialism-how-subsidizing-costs-while-restricting-supply-drives-americas-fiscal-imbalance/

+, of course:

Vernor Vinge: A Fire Upon the Deep https://books.google.com/books?id=fCCWWgZ7d6UC

Get full access to Brad DeLong's Grasping Reality at braddelong.substack.com/subscribe

View Details

Key Insights:

The Taliban should go to the World Bank and say: “For 42 years now, mechanized, airborne, and infantry armies and air and drone forces have been driving, walking, and flying over our country, killing us. that has done enormous amounts of damage. We are absolutely dirt poor. We will try as hard as we can: please give us money so that we can start call centers, start simple labor-intensive textile factories, and also beef up our handmade rug businesses so that we can export to pay for what we so desperately need. This is our only chance to make the lives of Afghans in the villages and even in Kabul better. This government would rather rule on the basis of honest, good government and prosperity. But if we cannot do that, others in our coalition will grow in power and rule on the basis of jihad.”

Economics is important for governments, because it allows them to change the kind of government they are—change the relationship of the government to the people, change crazy bad governments into governments that are still bad, but much more oriented towards prosperity and stability.

Things are not yet at their worst. It’s like when Bart says to Homer, “this is the worst day of my life!” and Homer says, “no, this is the worst day of your life so far.”

Hexapodia!

References:

Daron Acemoglu: Why Nation-Building Failed in Afghanistan: ‘The tragedy playing out this month has been 20 years in the making… a top-down state-building strategy that was always destined to fail… https://www.project-syndicate.org/commentary/afghanistan-top-down-state-building-failed-again-by-daron-acemoglu-2021-08

Costs of War in Afghanistan https://watson.brown.edu/costsofwar/figures/2021/human-and-budgetary-costs-date-us-war-afghanistan-2001-2022

Ryan Crocker (2016): Lessons Learned Interview https://www.washingtonpost.com/graphics/2019/investigations/afghanistan-papers/documents-database/?document=crocker_ryan_ll_first_interview_01112016

Graham Greene (1955): The Quiet American https://archive.org/details/quietamerican00gree_2/page/n7/mode/2up (New York: Penguin Books)

Josh Marshall: The Fall of Kabul, Washington and the Guys at the Fancy Magazines: ‘What we see in so many reactions, claims of disgrace and betrayal are no more than people who have been deeply bought into these endeavors suddenly forced to confront how much of it was simply an illusion… https://talkingpointsmemo.com/edblog/the-fall-of-kabul-washington-and-the-guys-at-the-fancy-magazines

Josh Marshall: You Wouldn’t Know It From the US News Coverage, But…: ’Something that seems to be getting very, very little above-the-fold coverage in the American press coverage: the key leaders of the US backed government over the last two decades are relaxedly meeting with the political leadership of the Taliban in Kabul about the formation of the new government… https://talkingpointsmemo.com/edblog/you-wouldnt-know-it-from-the-us-news-coverage-but

Martin Sandbu: The West Has Paid the Price For Neglecting The Afghan Economy: ‘Per capita incomes flatlined over the past decade and corruption is endemic…

Jordan Michael Smith: Twenty Years After 9/11, Are We Any Smarter?: ‘Our foreign policy wise people responded to the Sept. 11 terrorist attacks by embracing belligerence. What, if anything, have they learned?… https://newrepublic.com/article/163119/twenty-year-anniversary-911-attacks

Juggalos For Responsible Flushing: ‘Explains a lot about our current situation that Leon Panetta knows so little about Afghanistan that he thinks the Taliban and ISIS are allies…

Atif Mian: ‘The big injection of foreign money did not translate into sustainable growth. Why?…

+, of course:

Vernor Vinge: A Fire Upon the Deep https://books.google.com/books?id=fCCWWgZ7d6UC

(Remember: You can subscribe to this… weblog-like newsletter… here:

There’s a free email list. There’s a paid-subscription list with (at the moment, only a few) extras too.)

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“I have seen the future, and it works”. That was what Lincoln Steffens wrote in a letter to Maria Howe in 1919 with respect to Vladimir Lenin’s Soviet Union. Which societies are thought to “work”, and how does that influence the power and authority such societies have, and the global leadership they can exercise?

Key Insights:

We need to have another podcast on emerging great-power competition in a time of increasing global authoritarianism

Great powers remain great powers not just through economic and military strength, but by projecting an image that they are the wave of the future that others find attractive, or at least irresistible

If Europe is a great power over the next two generations, it will be because of the great power status of fear—because fear of what unstable and inconsistent America, China, India, and perhaps Russia might try to bully it to do if it does not present a united front.

The rise and fall of great powers is much more bizarre and contingent and subtle than historians see it in retrospect

Hexapodia!

References:

David Abernethy: The Dynamics of Global Dominance: European Overseas Empires, 1415-1980 https://books.google.com/?id=ennqNS1EOuMC

Peter Falk & al.(1971): Columbo https://www.youtube.com/watch?v=HsDERFDo0k4

Justin Kaplan: Lincoln Steffens: A Biography https://archive.org/details/lincolnsteffensb0000kapl_d7v2

Jacob T. Levy: Who’s Afraid of Judith Shklar? https://foreignpolicy.com/2018/07/16/whos-afraid-of-judith-shklar-liberalism/

William Powell, Myrna Loy, W.S. Van Dyke, Hunt Stromberg, & al. (1934): The Thin Man https://www.youtube.com/watch?v=bSThEEeFYeU

Judith Shklar: The Liberalism of Fear https://philpapers.org/archive/SHKTLO.pdf

Noah Smith: What Kind of Economy Leads to National Power? https://noahpinion.substack.com/p/what-kind-of-economy-leads-to-national

C.V. Wedgewood: William the Silent https://archive.org/details/in.ernet.dli.2015.220594

+, of course:

Vernor Vinge: A Fire Upon the Deep https://books.google.com/books?id=fCCWWgZ7d6UC

(Remember: You can subscribe to this… weblog-like newsletter… here:

There’s a free email list. There’s a paid-subscription list with (at the moment, only a few) extras too.)

Get full access to Brad DeLong's Grasping Reality at braddelong.substack.com/subscribe

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Key Insights:

There are a great many reasons to fear that the rise of industrial and post-industrial economic concentration is doing serious harm to the market economy’s (limited) ability to function as an efficiency-promoting societal calculating mechanism.

None of these have yet been nailed down.

But the neo-Brandeisians will have their chance because of the striking misbehavior of the tech platforms, which have thought too much about how to glue their users’ eyeballs to the screen so they can be sold ads and too little about how to make users and others happy and comfortable with their business models.

That is, the neo-Brandeisians will have their chance to the extent that they are not blocked by justices who know little of the law and less of economics.

Hexapodia!

References:

Autor, Dorn, Katz, Patterson, & Van Reenen (2017): Concentrating on the Fall of the Labor Share https://economics.mit.edu/files/12544**

Autor, Dorn, Katz, Patterson, & Van Reenen (2017): The Fall of the Labor Share & the Rise of Superstar Firms https://economics.mit.edu/files/12979

Azar, Marinescu & Steinbaum (2017): Labor Market Concentration <https://www.nber.org/papers/w24147>

Berger, Herkenhoff, & Mongey (2019): Labor Market Power https://www.nber.org/system/files/working_papers/w25719/w25719.pdf

Blonigen & Pierce (2016): Evidence for the Effects of Mergers on Market Power & Efficiency https://www.federalreserve.gov/econresdata/feds/2016/files/2016082pap.pdf**

De Loecker, Eeckhout, and Mongey (2021): Quantifying Market Power & Business Dynamism in the Macroeconomy https://www.nber.org/papers/w28761**

De Loecker, Eeckhout, & Unger (2019): The Rise of Market Power & the Macroeconomic Implications <https://www.federalreserve.gov/econresdata/feds/2016/files/2016082pap.pdf>

Gutierrez & Philippon (2016): Investment-less Growth: An Empirical Investigation http://pages.stern.nyu.edu/~tphilipp/papers/QNIK.pdf

Noah Smith (2021): The Economists' Revolt https://noahpinion.substack.com/p/the-economists-revolt

&, of course:

Vernor Vinge: A Fire Upon the Deep https://books.google.com/books?id=fCCWWgZ7d6UC

(Remember: You can subscribe to this… weblog-like newsletter… here:

There’s a free email list. There’s a paid-subscription list with (at the moment, only a few) extras too.)

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Key Insights!:

Hexapodia!

Drop the embargo now!

There is nothing that enables an authoritarian régime—or, indeed, pretty much any type of régime—hang together other than an implacable external enemy.

For the Cuban military-bureaucratic junta-oligarchy, that implacable external enemy consists of the Cuban exiles in Miami and their descendants

References:

Alexa van Sickle (2014): Viva la Revolución: Cuban Farmers Re-Gain Control Over Land: ‘As the state loosens its grip on food product… https://www.theguardian.com/global-development-professionals-network/2014/mar/11/cuba-agricultural-revolution-farmers

Damian Cave: Raúl Castro Thanks U.S., but Reaffirms Communist Rule in Cuba https://www.nytimes.com/2014/12/21/world/americas/castro-thanks-us-but-affirms-cubas-communist-rule.html

Marianne Ward and John Devereux (2010): The Road Not Taken: Pre-Revolutionary Cuban Living Standards in Comparative Perspective https://web.archive.org/web/20121217122436/http://econweb.umd.edu/~davis/eventpapers/CUBA.pdf

Brian Latell (2005): After Fidel: The Inside Story of Castro’s Régime and Cuba’s Next Leader New York: St. Martin’s Press, 2005 https://books.google.com/books?id=GESwBAAAQBAJ

Carmelo Mesa-Lago (2019): There’s Only One Way Out for Cuba’s Dismal Economy https://www.nytimes.com/2019/03/28/opinion/cuba-economy.html

Carlos Eire: Raúl Castro Leaving Power Won’t Bring Change to Cuba Anytime Soon https://www.washingtonpost.com/opinions/2021/04/20/raul-castro-leave-power-cuba-wont-bring-change/

Noah Smith: Why Cuba Is Having an Economic Crisis https://noahpinion.substack.com/p/why-cuba-is-having-an-economic-crisis

&, of course:

Vernor Vinge: A Fire Upon the Deep https://books.google.com/books?id=fCCWWgZ7d6UC

Notes:

Post-Fidel Timeline:

2008 February - Raul Castro takes over as president, days after Fidel announces his retirement.

2008 May - Bans on private ownership of mobile phones and computers lifted.

2008 June - Plans are announced to abandon salary equality. The move is seen as a radical departure from the orthodox Marxist economic principles observed since the 1959 revolution. EU lifts diplomatic sanctions imposed on Cuba in 2003 over crackdown on dissidents.

2008 July - In an effort to boost Cuba's lagging food production and reduce dependence on food imports, the government relaxes restrictions on the amount of land available to private farmers.

2008 September - Hurricanes Gustav and Ike inflict worst storm damage in Cuba's recorded history, with 200,000 left homeless and their crops destroyed.

2008 October - State oil company says estimated 20bn barrels in offshore fields, being double previous estimates.

2008 November - Russian President Dmitry Medvedev visits. Two countries conclude new trade and economic accords in sign of strengthening relations. Raul Castro pays reciprocal visit to Russia in January 2009. Chinese President Hu Jintao visits to sign trade and investment accords, including agreements to continue buying Cuban nickel and sugar.

2008 December - Russian warships visit Havana for first time since end of Cold War. Government says 2008 most difficult year for economy since collapse of Soviet Union. Growth nearly halved to 4.3%.

2009 March - Two leading figures from Fidel era, Cabinet Secretary Carlos Lage and Foreign Minister Felipe Perez Roque, resign after admitting "errors". First government reshuffle since resignation of Fidel Castro. US Congress votes to lift Bush Administration restrictions on Cuban-Americans visiting Havana and sending back money.

2009 April - US President Barack Obama says he wants a new beginning with Cuba.

2009 May - Government unveils austerity programme to try to cut energy use and offset impact of global financial crisis.

2009 June - Organisation of American States (OAS) votes to lift ban on Cuban membership imposed in 1962. Cuba welcomes decision, but says it has no plans to rejoin.

2009 July - Cuba signs agreement with Russia allowing oil exploration in Cuban waters of Gulf of Mexico.

2010 February - Political prisoner Orlando Zapata Tamayo dies after 85 days on hunger strike.

2010 May - Wives and mothers of political prisoners are allowed to hold demonstration after archbishop of Havana, Jaime Ortega, intervenes on their behalf.

2010 July - President Castro agrees to free 52 dissidents under a deal brokered by the Church and Spain. Several go into exile.

2010 September - Radical plans for massive government job cuts to revive the economy. Analysts see proposals as biggest private sector shift since the 1959 revolution.

2011 January - US President Barack Obama relaxes restrictions on travel to Cuba. Havana says the measures don't go far enough.

2011 March - Last two political prisoners detained during 2003 crackdown are released.

2011 April - Communist Party Congress says it will look into possibility of allowing Cuban citizens to travel abroad as tourists.

2011 August - National Assembly approves economic reforms aimed at encouraging private enterprise and reducing state bureaucracy.

2011 November - Cuba passes law allowing individuals to buy and sell private property for first time in 50 years.

2011 December - The authorities release 2,500 prisoners, including some convicted of political crimes, as part of an amnesty ahead of a papal visit.

2012 March - Pope Benedict visits, criticising the US trade embargo on Cuba and calling for greater rights on the island.

2012 April - Cuba marks Good Friday with a public holiday for the first time since recognition of religious holidays stopped in 1959.

2012 June - Cuba re-imposes customs duty on all food imports in effort to curb selling of food aid sent by Cubans abroad on the commercial market. Import duties had been liberalised in 2008 after series of hurricanes caused severe shortages.

2012 October - Spanish politician Angel Carromero is jailed for manslaughter over the death of high-profile Catholic dissident Oswaldo Paya. Mr Carromero was driving the car when, according to the authorities, it crashed into a tree. Mr Paya's family say the car was rammed off the road after he had received death threats. The government abolishes the requirement for citizens to buy expensive exit permits when seeking to travel abroad. Highly-qualified professionals such as doctors, engineers and scientists will still require permission to travel, in order to prevent a brain drain.

2012 November - President Raul Castro says the eastern province of Santiago was hard hit by Hurricane Sandy, with 11 people dead and more than 188,000 homes damaged. A United Nations report says Sandy destroyed almost 100,000 hectares of crops.

2013 February - The National Assembly re-elects Raul Castro as president. He says he will stand down at the end of his second term in 2018, by which time he will be 86.

2013 July - Five prominent veteran politicians, including Fidel Castro ally and former parliament leader Ricardo Alarcon, are removed from the Communist Party's Central Committee in what President Raul Castro calls a routine change of personnel.

2014 January - First phase of a deepwater sea port is inaugurated by Brazil and Cuba at Mariel, a rare large foreign investment project on the island.

2014 March - Cuba agrees to a European Union invitation to begin talks to restore relations and boost economic ties, on condition of progress on human rights. The EU suspended ties in 1996.

2014 July - Russian President Vladimir Putin visits during a tour of Latin America, says Moscow will cancel billions of dollars of Cuban debt from Soviet times. Chinese President Xi Jinping visits, signs bilateral accords.

2014 September/October - Cuba sends hundreds of frontline medical staff to West African countries hit by the Ebola epidemic.

2014 December - In a surprise development, US President Barack Obama and Cuba's President Raul Castro announce moves to normalise diplomatic relations between the two countries, severed for more than 50 years.

2015 January - Washington eases some travel and trade restrictions on Cuba.

Two days of historic talks between the US and Cuba take place in Havana, with both sides agreeing to meet again. The discussions focus on restoring diplomatic relations but no date is set for the reopening of embassies in both countries. President Raul Castro calls on President Obama to use his executive powers to bypass Congress and lift the US economic embargo on Cuba.

2015 February - Cuban and US diplomats say they have made progress in talks in Washington to restore full relations.

2015 May - Cuba establishes banking ties with US, which drops country from list of states that sponsor terrorism.

2015 July - Cuba and US reopen embassies and exchange charges d’affaires.

2015 December - Cuban and US officials hold preliminary talks on mutual compensation.

2016 January - US eases a number of trade restrictions with Cuba.

2016 March - Cuba and the European Union agree to normalise relations. US President Barack Obama visits Cuba in the first US presidential visit there in 88 years.

2016 May - Cuba takes steps to legalise small and medium-sized businesses as part of economic reforms.

2016 November - Fidel Castro, former president and leader of the Cuban revolution, dies at the age of 90. Cuba declares nine days of national mourning.

2017 January - Washington ends a long-standing policy which grants Cuban immigrants the right to remain in the US without a visa.

2017 June - US President Donald Trump overturns some aspects of predecessor Barack Obama's policy on Cuba which brought about a thaw in relations between the two countries.

2017 October - Diplomatic row over mysterious sonic attacks which are said to have affected the health of US and Canadian embassy staff in Havana.

2018 April - Senior Communist Party stalwart Miguel Diaz-Canel becomes president, ending six decades of rule by the Castro family.

2019 May - Cuba introduces food rationing.

2020 March - Cuba closes its borders in an attempt to keep out the COVID-19 plague.

2021 April - Raul Castro steps down as General Secretary of the Cuban Communist Party

Alexa van Sickle (2014): Viva la Revolución: Cuban Farmers Re-Gain Control Over Land: ‘As the state loosens its grip on food production, Cuban farmers and independent co-operatives will need support to help solve the country’s agriculture crisis: Last year, Cuba spent over $1.6bn (£1bn) on food imports… 60% of its domestic food requirement…. Since 2007, President Raul Castro, noting its connection with national security, has made food security a priority. State farms hold over 70% of Cuba’s agricultural land; about 6.7m hectares. In 2007, 45% of this land was sitting idle. In 2008 Castro allowed private farmers and co-operatives to lease unused land with decentralised decision-making, and loosened regulations on farmers selling directly to consumers. Since 2010, Cubans with small garden plots, and small farmers, have been allowed to sell produce directly to consumers. However, agriculture in Cuba remains in crisis. A government report issued in July 2013 showed that productivity had not increased…

LINK: https://www.theguardian.com/global-development-professionals-network/2014/mar/11/cuba-agricultural-revolution-farmers

Marianne Ward and John Devereux (2010): The Road Not Taken: Pre-Revolutionary Cuban Living Standards in Comparative Perspective: ‘All indications are that Cuba was once a prosperous middle-income economy. On the eve of the revolution, we find that incomes were fifty to sixty percent of European levels. They were among the highest in Latin America at about thirty percent of the US. In relative terms, however, Cuba was richer earlier on. The crude income comparisons that are possible suggest that income per capita during the 1920’s was in striking distance of Western Europe and the Southern States of the US. After the revolution, Cuba has slipped down the world income distribution. As best we can tell, current levels of income per capita are below their pre-revolutionary peaks…

LINK: https://web.archive.org/web/20121217122436/http://econweb.umd.edu/~davis/eventpapers/CUBA.pdf

Carlos Eire: Raúl Castro Leaving Power Won’t Bring Change to Cuba Anytime Soon: ‘Raúl Castro is relinquishing all power on the eve of his 90th birthday. It would be a mistake to think that this piece of kabuki theater will bring change to Cuba any time soon…. The Communist Party in Cuba, which has had total control of the island for over 60 years, is not about to relax its grip. And since this party is controlled by the Revolutionary Armed Forces, Cuba is really governed by an old-fashioned Latin American military junta. It is an unusual junta, full of former rebels, but it is a junta….

Raúl Castro is stepping down from the throne, so to speak, but he will keep casting a long shadow as long as he can. Moreover, plenty of generals and colonels remain, ranging in age from their 50s to 80s. A top member of that exclusive circle is Raúl’s son, Col. Alejandro Castro Espín, who is only 55 and runs the country’s dreaded secret police. Official posts outside of the armed forces have a cosmetic sheen to them. The prime example is President Miguel Díaz-Canel…. Raw power resides in men such as Alejandro Castro Espín and 60-year-old Gen. Luis Alberto Rodríguez López-Callejas, ex-husband of Raul’s daughter Deborah. A member of the Castro dynasty by marriage, he is one of the most powerful men in Cuba, totally in charge of the branch of the Revolutionary Armed Forces that runs most of Cuba’s tourist industry. Since tourism is the country’s main source of income, his clout is considerable. The two brothers-in-law are purported to be engaged in a fierce struggle behind the scenes for the throne vacated by Raúl…..

A new constitution in 2019…. Many articles outlaw dissent, such as No. 4: “The socialist system that this Constitution supports is irrevocable. Citizens have the right to combat through any means, including armed combat… against any that intends to topple the political, social, and economic order established by this Constitution.”… Article 229 seeks to drive a nail in the coffin of hope: “In no case will the pronouncements be reformed regarding the irrevocability of the socialism system established in Article 4.”…

What will happen next? Is it possible that among the younger Cuban communists a Gorbachev lurks?… Is it possible that the junta could be overthrown, somehow, in traditional Latin fashion? Theoretically, one must suppose, anything is possible…. Theoretical possibilities fall into the realm of faith rather than reason…

LINK: https://www.washingtonpost.com/opinions/2021/04/20/raul-castro-leave-power-cuba-wont-bring-change/

Carmelo Mesa-Lago (2019): There’s Only One Way Out for Cuba’s Dismal Economy: ‘The island’s economy is neither efficient nor competitive. To move forward it must deepen and accelerate reforms. The market socialism model could provide a way….. For the past 60 years, Cuba has been unable to finance its imports with its own exports and generate appropriate, sustainable growth without substantial aid and subsidies from a foreign nation. This is the longstanding legacy of Cuba’s socialist economy…. Between 1960 and 1990, the Soviet Union gave Cuba $65 billion (triple the total amount of aid that President John Kennedy’s Alliance for Progress gave Latin America). At its peak in 2012, Venezuelan aid, subsidies and investment amounted to $14 billion, or close to 12 percent of the gross domestic product. And yet, despite the staggering foreign aid subsidies it has received, the economy’s performance has been dismal…. Industrial, mining and sugar production are well below 1989 levels, and the production of 11 out of 13 key agricultural and fishing products has declined. Cuba is now facing its worst economic crisis since the 1990s.

Tourism has been a bright spot for Cuba. From 2007 to 2017, visitors to the island doubled, largely thanks to the arrival of more Americans, whose numbers grew considerably after President Barack Obama eased diplomatic relations in 2015. But Hurricane Irma and the tightening of travel restrictions by President Trump (like barring American tourists from using hotels and restaurants run by Cuba’s military) and the alert declared by the administration after the sonic attacks on United States diplomats in Havana led to a drop in tourism during the end of 2017 and the first half of 2018. Tourism rebounded in September, driven by a cruise industry that offers customers lodging, meals and tours. Those visitors spend about 14 percent of what those arriving by air spend….

Cuba’s woes are a result of the inefficient economic model of centralized planning, state enterprises and agricultural collectivization its leaders have pursued despite the failure of these models worldwide. In his decade in power, President Raúl Castro tried to face his brother Fidel’s legacy of economic disaster head on by enacting a series of market-oriented economic structural reforms. He also opened the door to foreign investment, but so far, the amount materialized has been one-fifth of the goal set by the leadership for sustainable development…. The pace of reforms has been slow and subject to many restrictions, disincentives and taxes that have impeded the advance of the private economy and desperately needed growth. It is time to abandon this failed model and shift to a more successful one as in China and Vietnam….

Poor agricultural production, the result of collectivized agriculture, causes the island to spend $1.5 billion a year on food imports. As part of his agrarian reform, Mr. Castro began leasing fallow state-owned land to farmers through 10-year contracts—now increased to 20 years—that may be canceled or renewed depending on the farms performance. Farmers must sell most of their crops to the government at prices set by the state, which are below market prices…. If reform is carried out and foreign investors are allowed to hire and pay a full salary directly to their employees, there will be a significant improvement in the economy and the government can undertake the desperately needed monetary unification that will attract more investment and eliminate the economic distortions that plague the economy.

LINK: https://www.nytimes.com/2019/03/28/opinion/cuba-economy.html

Cuba Employment Shares: Agriculture 25%, Industry 10%, Services 65%

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Key Insights:

“This time, for sure!…” Are the Democrats Bullwinkle Moose or Rocket J. Squirrel “that trick never works!” in hoping that they can get a high-investment high-productivity growth full-employment high-wage growth economy, and then the political life for true equality of opportunity will be doable?…

Milton Friedman is of powerful historical importance as one of the principal creators of our still-neoliberal world, but his ideas now—whether monetarism, or his assumption that all political organizations and policies everywhere and always are inescably rent-seeking grifters—are now of historical interests only…

There will be many future missteps in our search for the road to utopia…

The old world is dying, and the new world struggles to be born, so now is a time of monsters…

Noah should really listen to and read Jeet Heer…

It would be silly not to recognize the political peril of this moment, but also not to recognize its democratic potential: pessimism of the intellect, yes; but also optimism with the internet…

We are coquetting with the modes of expression of Antonio Gramsci today, aren’t we?

Hexapodia!

References

David Beckworth (2010): Case Closed: Milton Friedman Would Have Supported QE2 https://macromarketmusings.blogspot.com/2010/11/case-closed-milton-friedman-would-have.html

Zach Carter:The Price of Peace: Money, Democracy, & the Life of John Maynard Keynes https://www.zacharydcarter.com

Zach Carter:The End of Friedmanomics https://newrepublic.com/article/162623/milton-friedman-legacy-biden-government-spending

Brad DeLong (1999): The Triumph? of Monetarism https://delong.typepad.com/delong_long_form/1999/10/j-bradford-delong-the-triumph-of-monetarism.html

Brad DeLong (2001): The Monetarist Counterrevolution https://web.archive.org/web/20010517134105/http://www.j-bradford-delong.net/TotW/counterrev.html

Brad DeLong (2015): The Monetarist Mistake https://www.project-syndicate.org/commentary/friedman-ideas-great-recession-by-j--bradford-delong-2015-03

Brad DeLong (2019): “Passing the Baton”: The Twitter Rant https://twitter.com/delong/status/1100166150845939712

Brad DeLong & Zack Beauchamp (2019): “Passing the Baton”: The Interview https://www.vox.com/policy-and-politics/2019/3/4/18246381/democrats-clinton-sanders-left-brad-delong

Brad DeLong (2019): “Passing the Baton”: The Interview: Comment<https://www.bradford-delong.com/2019/03/passing-the-baton-the-interview.html>

Brad DeLong (2007): Right from the Start?: What Milton Friedman Can Teach Progressives https://web.archive.org/web/20070513134239/http://democracyjournal.org/article.php?ID=6514

Brad DeLong (2017): Helicopter Money: When Zero Just Isn’t Low Enough https://www.milkenreview.org/articles/helicopter-money-when-zero-just-isnt-low-enough

Milton Friedman (2000): Canada & Flexible Exchange Rates https://www.bankofcanada.ca/wp-content/uploads/2010/08/keynote.pdf

Milton Friedman & Rose Director Friedman: Free to Choose: A Personal Statement

John Maynard Keynes (1919): The Economic Consequences of the Peace

John Maynard Keynes (1926): The End of Laissez-Faire

John Maynard Keynes (1926): A Short View of Russia

John Maynard Keynes (1936): The General Theory of Employment, Interest & Money

John Maynard Keynes (1931): An Economic Analysis of Unemployment https://www.bradford-delong.com/2004/07/the-mammon-of-unrighteousness.html

Jay Ward & co.: The Rocky & Bullwinkle Show https://www.youtube.com/results?search_query=rocky+and+bullwinkle+show

&, of course:

Vernor Vinge: A Fire Upon the Deep https://books.google.com/books?id=fCCWWgZ7d6UC

Zach Carter:The End of Friedmanomics https://newrepublic.com/article/162623/milton-friedman-legacy-biden-government-spending:

When he arrived in South Africa on March 20, 1976, Milton Friedman was a bona fide celebrity…. Friedman was a bestselling author and no stranger to fine living. But he was astonished by both “the extraordinary affluence of the White community” and the “extraordinary inequality of wealth” in South Africa. Friedman was not a man to scold opulence, and yet he found the tension permeating apartheid South Africa palpable in both taxicabs and hotel ballrooms. The “hardboiled attitudes” of Mobil chairman Bill Beck and his friends were difficult for him to endure….

All of which makes a contemporary reading of Friedman’s Cape Town lectures… harrowing.… His first speech was an unremitting diatribe against political democracy.… Voting, Friedman declared, was inescapably corrupt, a distorted “market” in which “special interests” inevitably dictated the course of public life. Most voters were “ill-informed.” Voting was a “highly weighted” process that created the illusion of social cooperation that whitewashed a reality of “coercion and force.” True democracy, Friedman insisted, was to be found not through the franchise, but the free market, where consumers could express their preferences with their unencumbered wallets. South Africa, he warned, should avoid the example of the United States, which since 1929 had allowed political democracy to steadily encroach on the domain of the “economic market,” resulting in “a drastic restriction in economic, personal, and political freedom.”…

Friedman did not subscribe to biological theories of racial inferiority.… The program Friedman prescribed for apartheid South Africa in 1976 was essentially the same agenda he called for in America over his entire career as a public intellectual—unrestrained commerce as a cure-all for inequality and unrest.

That this prescription found political purchase with the American right in the 1960s is not a surprise. Friedman’s opposition to state power during an era of liberal reform offered conservatives an intellectual justification to defend the old order. What remains remarkable is the extent to which the Democratic Party—Friedman’s lifelong political adversary—came to embrace core tenets of Friedmanism. When Friedman passed away in 2006, Larry Summers, who had advised Bill Clinton and would soon do the same for Barack Obama, acknowledged the success of Friedman’s attack on the very legitimacy of public power within his own party. “Any honest Democrat will admit that we are now all Friedmanites,” he declared in The New York Times.

No longer. In the early months of his presidency, Joe Biden has pursued policy ambitions unseen from American leaders since the 1960s. If implemented, the agenda he described in an April 28 address to Congress would transform the country—slashing poverty, assuaging inequality, reviving the infrastructure that supports daily economic life, and relieving the financial strains that childcare and medical care put on families everywhere. It will cost a lot of money, and so far at least, Biden isn’t letting the price tag intimidate him. “I want to change the paradigm,” he repeated three times at a press conference in March…

Zach Carter:The Price of Peace: Money, Democracy, & the Life of John Maynard Keynes https://www.zacharydcarter.com:

The school of thought that has come to be associated with the name of Keynes no longer has much to do with the moral and political ideals Keynes himself prized. Keynesianism in this broader sense was for a time synonymous with liberal internationalism—the idea that shrewd, humane economic management could protect democracies from the siren songs of authoritarian demagogues and spread peace and prosperity around the globe….

The key to realizing that international vision was domestic economic policy making. International political stability would be achieved—or at least encouraged—by alleviating domestic economic inequality. State spending on public works and public health could be combined with redistributive taxation to boost consumer demand, while establishing an environment in which great art could thrive. In his maturity, Keynes offered radicals a deal: They could realize the cultural and moral aims of liberationist revolution—a more equal society and a democratically accountable political leadership—while avoiding the risks and tragedies inherent to violent conflict. He claimed that the social order established by nineteenth-century imperialism and nineteenth-century capitalism was not so rigid that it could not be reformed rather than overthrown.

After nearly a century on trial, this Keynesianism has not embarrassed itself, but neither has it been vindicated. The New Deal, the Beveridge Plan, and the Great Society fundamentally reordered British and American life, making both societies more equal, more democratic, and more prosperous. In the 1930s, black poverty in the United States was so high that nobody bothered to measure it. By the 1950s, it was over 50 percent. Today it is about 20 percent. This is progress. But it is decidedly not the world promised by the Communist Party in the 1930s, when it denounced Franklin Delano Roosevelt as a tool of the business elite. It cannot compete with the dreams of liberation presented by Black Power revolutionaries of the 1960s….

Keynesians can persuasively argue that today’s tragedies are the product of a failure to fully implement Keynesian ideas rather than a failure of Keynesian policies…. For the past thirty-five years, the United States and Great Britain have mixed Keynesian disaster management—bailouts and stimulus programs—with the aristocratic deregulatory agenda of Hayekian neoliberalism.

It is appropriate for neoliberalism to take most of the blame for the political upheavals of the twenty-first century. The neoliberal faith in the power of financial markets bequeathed us the financial crisis of 2008, and the fallout from that disaster has fueled dozens of hateful movements around the world. While the American commitment to Keynesian stimulus after the crash was inconstant, Keynesian ideas were simply abandoned throughout most of Europe…. The economic ruin… has energized neofascist political parties, which now threaten the political establishment…. But pointing the finger at neoliberalism raises uncomfortable questions for Keynes and his defenders. Why has Keynesianism proven to be so politically weak, even among ostensibly liberal political parties and nations? The Keynesian bargain of peace, equality, and prosperity ought to be irresistible in a democracy. It has instead been fleeting and fragile. Keynes believed that democracies slipped into tyranny when they were denied economic sustenance. Why, then, have so many democracies elected to deny themselves economic sustenance?…

This is a dark time for democracy—a statement that would have been unthinkable to U.S. and European leaders only a few short years ago. It took decades of mismanagement and unlearning to manufacture this global crisis, and it cannot be undone with a few new laws or elections.

Mainstream economists now speak openly of moving “beyond neoliberalism”…. Keynesianism in this purest, simplest form is not so much a school of economic thought as a spirit of radical optimism, unjustified by most of human history and extremely difficult to conjure up precisely when it is most needed: during the depths of a depression or amid the fevers of war. Yet such optimism is a vital and necessary element of everyday life…. A better future was not beyond our control if the different peoples of the world worked together.… “Were the Seven Wonders of the world built by Thrift?” he asked readers of A Treatise on Money. “I deem it doubtful.”… In the long run, almost anything is possible.

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Zach Carter, who was supposed to be our guest this week, has a cold. So we have a grab-bag: vaccination & votes, NIMBYism & California growth, aversion to continuing UI, Google’s quality as a search engine, & Wilhelmine Germany & Contemporary China

Key Insights:

Red states will see a lot of COVID-hurt this summer fall and winter for… reasons we still find incomprehensible…

NIMBYism has not killed California growth because monkey-smarts are becoming, relatively, less important as a factor of production…

The right response to those who advocate cutting off UI now is Ezra Klein’s: “My God! Let people have a minute!”…

Google can be a useful search engine, if only for your own backlist, if you can remember eight unusual words you used to write down your thoughts the last time you thought seriously about something…

There are too many parallels between Wilhelmine Germany back before World War I and China today for us to sleep easy; the best we can hope is that Marx was right when he said that, when history repeats, the first time it is tragedy, the second time farce…

Hexapodia!

References:

Geoffrey Fowler: Google’s Search Results Have Gotten Worse: https://www.washingtonpost.com/technology/2020/10/19/google-search-results-monopoly/

Michael Hiltzik: Is California Really Anti-Business? Don’t Tell Our Economy https://www.latimes.com/business/story/2021-05-10/ceos-california-business

Ezra Klein & Betsey Stevenson: Transcript https://www.nytimes.com/2021/06/18/podcasts/transcript-ezra-klein-interviews-betsey-stevenson.html

Seth Masket: Correlation of Biden vote share & adult Covid vaccination rate [state-by-state] is now at .847. (CDC data)… https://twitter.com/smotus/status/1404483957647831046

Chad Stone: May Job Growth Strong But Unemployment Insurance Reform Still Needed https://www.cbpp.org/blog/may-job-growth-strong-but-unemployment-insurance-reform-still-needed

Matthew Winkler: California Defies Doom With No. 1 U.S. Economy https://www.bloomberg.com/opinion/articles/2021-06-14/california-defies-doom-with-no-1-u-s-economy

&, of course:

Vernor Vinge: A Fire Upon the Deep https://books.google.com/books?id=fCCWWgZ7d6UC

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There’s a free email list. There’s a paid-subscription list with (at the moment, only a few) extras too.)

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Key Insights:

Hexapodia!

Periodically, America has had “the frontier has closed, now scarcity rules!” panics—& they have been bad, but so far they have all been false alarms.

The “new frontier” to alleviate scarcity in America is intensive growth, right here, but more: economic poldering.

References:

John F. Kennedy (1960): “The New Frontier”: Liberal Party Nomination Acceptance Speech https://www.jfklibrary.org/archives/other-resources/john-f-kennedy-speeches/liberal-party-nomination-nyc-19600914

William H. Kilpatrick & al. (1933): The Educational Frontier https://www.journals.uchicago.edu/doi/abs/10.1086/705648?journalCode=schools

Perry Miller (1956): Errand into the Wilderness https://www.google.com/books/edition/Errand_Into_the_Wilderness/oKfCbW3B1xkC

Mancur Olson (1982): The Rise & Decline of Nations: Economic Growth, Stagflation, & Social Rigidities https://www.google.com/books/edition/The_Rise_and_Decline_of_Nations/vKxxtjJz--wC**

Rick Perlstein (2001): Before the Storm: Barry Goldwater & the Unmaking of the American Consensus https://www.google.com/books/edition/Before_the_Storm/6jb9AgAAQBAJ

Rick Perlstein (2008): Nixonland: The Rise of a President & the Fracturing of America https://www.google.com/books/edition/Nixonland/dM_enWzoghoC

Noah Smith: America's Scarcity Mindset: Is Our Society Turning into a Zero-Sum Competition for Survival? https://noahpinion.substack.com/p/americas-scarcity-mindset

Lester Thurow (1980): The Zero-Sum Society: Distribution & the Possibilities for Change https://www.google.com/books/edition/The_Zero_Sum_Society/V5uBbTOzYOAC

Frederick Jackson Turner (1893): The Significance of the Frontier in American History https://www.historians.org/about-aha-and-membership/aha-history-and-archives/historical-archives/the-significance-of-the-frontier-in-american-history-(1893)

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Key Insights:

There is a four-day creative-destruction festschrift for Philippe Aghion & Peter Howitt starting June 9: The Economics of Creative Destruction https://zoom.us/j/98595732585

When industrial policy in America has been successful, it has always had a profound political driving motive: maintaining independence, manifest destiny, Sputnik, and so on. The only such driver today—and it is urgent—is green energy to fight global warming…

The U.S. used to be excellent not just on the “novelty” prong of Breznitz’s prosperity-in-an-unforgiving-world quadent, but also on the “engineering design”, “second-generation innovation”, and “production-assembly” prongs as well. We threw that away in the era Reagan began—the era of neoliberalism, financialization-driven short-termism, and tax cut-driven exchange overvaluation. We need to get those other three prongs back, lest we become a country of technoprinces and dopamine-loop brain-hacked technoserfs…

When you do industrial policy, you need to think very carefully about what kind of economy you want to create…

A better retranslation of the Arkhilokhos-Isaiah Berlin “Fox & Hedgehog” tag line is: “The fox knows many tricks; the hedgehog knows one good one…”

Hexapodia!

References

Bill Janeway: The Ecology of Innovation https://www.project-syndicate.org/onpoint/innovation-according-to-philippe-aghion-and-dan-breznitz-by-william-janeway-2021-05: reviewing:

Philippe Aghion, Céline Antonin, & Simon Bunel: The Power of Creative Destruction: Economic Upheaval and the Wealth of Nations https://www.google.com/books/edition/The_Power_of_Creative_Destruction/7SAZEAAAQBAJ

Dan Breznitz: Innovation in Real Places: Strategies for Prosperity in an Unforgiving World https://www.google.com/books/edition/Innovation_in_Real_Places/wr0cEAAAQBAJ

Stephen S. Cohen & J. Bradford DeLong: Concrete Economics: A Hamiltonian Approach to Economic Policy https://www.google.com/books/edition/Concrete_Economics/BXoyBgAAQBAJ

Andrew DelBanco: The War Before the War: Fugitive Slaves and the Struggle for America's Soul from the Revolution to the Civil War https://www.google.com/books/edition/The_War_Before_the_War/FPq0DwAAQBAJ****

John Helverston & Jonas Nahm: China’s Key Role in Scaling Low-Carbon Energy Technologies https://pubmed.ncbi.nlm.nih.gov/31727813/

Elizabeth Janeway: Man’s World, Women’s Place: A Study in Social Mythology https://www.google.com/books/edition/Man_s_World_Woman_s_Place/vRYpAAAAYAAJ

Òscar Jordà, Moritz Schularick, & Alan M. Taylor: The Great Mortgaging: Housing Finance, Crises, and Business Cycles https://www.nber.org/papers/w20501

Sill Family: Vineyard https://sillfamilyvineyards.com

Wikipedia: Applied Materials https://en.wikipedia.org/wiki/Applied_Materials

Wikipedia: ASML Holdings https://en.wikipedia.org/wiki/ASML_Holding

Wikipedia: Kate Mulgrew https://en.wikipedia.org/wiki/Kate_Mulgrew

Wikipedia: Orange Is the New Black https://en.wikipedia.org/wiki/Orange_Is_the_New_Black

Wikipedia: TSMC https://en.wikipedia.org/wiki/TSMC

Wikipedia: Sematech https://en.wikipedia.org/wiki/SEMATECH

Wikipedia: Star Trek: Voyager

&, of course:

Vernor Vinge: A Fire Upon the Deep https://books.google.com/books?id=fCCWWgZ7d6UC

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Key Insights:

Brad cannot, in fact, reliably and accurately multiply two-digit numbers in his head…

When people comment on twitter that we are a nerdy podcast, we respond by going nerdier..

If we get an relatively egalitarian income distribution, the care-centered service economy will give us at least as many interesting jobs to do in the future as we could possibly want—at least for “future” meaning “next two hundred years”…

Who controls the consumption spending decisions is key to answering the question of what the future of work will be like: it really matters whether it is a few rich people, a broad base of humanity, or the robots…

The market economy is very efficient at crowdsourcing solutions to and then organizing the implementation of the problems that it sets itself. But the major problem the market economy sets itself is how to maximize the amount of necessities, conveniences, and luxuries delivered to the people who control valuable property rights who think they need stuff.

Hexapodia!

References:

David Autor: Work of the Past; Work of the Future https://economics.mit.edu/files/16724 https://www.aeaweb.org/webcasts/2019/aea-distinguished-lecture-work-of-the-past-work-of-the-future

Kevin Kelly: http://kk.org

Vernor Vinge: A Deepness in the Sky

&, of course:

Vernor Vinge: A Fire Upon the Deep https://books.google.com/books?id=fCCWWgZ7d6UC

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Key Insights:

Josef Schumpeter’s “depressions are… forms of something which has to be done, namely, adjustment to previous economic change. Most of what would be effective in remedying a depression would be equally effective in preventing this adjustment…” is perhaps the most zombie of zombie economic ideas.

Schumpeter’s zombie leads to episodes of dorkish zombie economic derp like John Cochrane’s claim in November 2008 that we needed a recession because we were then—in November 2008—building too many houses and employing too many people in construction:

Another destructive zombie idea is the idea that the Phillips Curve and adaptive expectations guarantee that you only need to worry about inflation—the unemployment will take care of itself, and that if policy errs and pushes unemployment up too high above the natural this year, you will get it back because unemployment will then necessarily be an equal amount below the natural rate in some future year—as long as inflation is stabilized.

The PCAE zombie leads to episodes like today, when a surprisingly large number of people who should know better are worrying not about unemployment but only about inflation

To mix metaphors, when we go hunting for zombie economic ideas, there are lots of fish in barrels for us to shoot. We do not have to try to shoot them all. Indeed, we should not.

We should, instead, listen to Markus Brunnermeier at 12:30/09:30 EDT/PDT every Thursday at https://bcf.princeton.edu/markus-academy/

Hexapodia!!

References:

Markus Brunnermeier & Friends: Markus’ Academy https://bcf.princeton.edu/markus-academy/

Paul Krugman (2020): Arguing with Zombies: Economics, Politics, & the Fight for a Better Future https://books.google.com/books?id=iyefDwAAQBAJ

John Stuart Mill (1844): Review of Thomas Tooke, “An Inquiry into the Currency Principle” & Robert Torrens, “An Inquiry into the Practical Working of the Proposed Arrangements for the Renewal of the Charter of the Bank of England, and the Regulation of the Currency” https://www.marxists.org/reference/archive/mill-john-stuart/1844/currency.htm

John Quiggin (2012): Zombie Economics: How Dead Ideas Still Walk Among Us https://books.google.com/books?id=DOn09O3ncy4C

&, of course:

Vernor Vinge: A Fire Upon the Deep https://books.google.com/books?id=fCCWWgZ7d6UC

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Key Insights:

Henry: We need to be critical of other people in the public sphere, but we need to be critical in an extraordinarily humble way—to recognize that we, all of us, are incredibly biased as individuals. We see the moats in our brothers' eyes very well. We do not see the beams and our own. We have a duty to others to try to help them to remove the beams in a polite, quiet, sometimes insistent way... think very carefully about the ways in which we can genuinely be constructive in criticism...

Brad: We are in huge trouble: organizing our 7.8 billion person anthology intelligence to actually get done what we need to get done in the next century appears beyond our capabilities. It may be time to go back to the trees, or even to devolve completely and let some other more mature species more capable of collective action and organization come up—the raccoons, or something. Nobody has a gospel. So the next move has to be, somehow. with the head...

Noah: Perhaps this is just the optimism of relative youth but I think that we're going to break out of our local maximum and find a better way. If you were in the 1930s, and you looked at the state of both America and the world, you would see even more cause for despair. Yet we got our way out of that without having to leave the planet to the raccoons. I think we will this time as well. The key insight is that we are still in the process of learning about what democracy means and about how, you know, humans can participate in their own government without turning it into an unwieldy shout fest.

All: Hexapodia!

P.S.: Marko Kloos's Paladium Wars https://www.amazon.com/The-Palladium-Wars/dp/B086CYB6VS series is excellent.

References:

Jason Brennan: Against Democracy https://www.google.com/books/edition/Against_Democracy/ND_BDgAAQBAJ

Bryan Caplan: The Myth of the Rational Voter: Why Democracies Choose Bad Policies https://www.google.com/books/edition/The_Myth_of_the_Rational_Voter/8_S6cOkHK3MC

John Dewey: The Political Writings https://www.google.com/search?tbm=bks&hl=en&q=HEw6VKOPzpwC

John Dewey: The Public and Its Problems: An Essay in Political Inquiry https://www.google.com/search?tbm=bks&hl=en&q=M16E5ORLJqIC

Henry Farrell: In Praise of Negativity https://crookedtimber.org/2020/07/24/in-praise-of-negativity/

Henry Farrell & Jack Knight: Reconstructing International Political Economy: A Deweyan Approachhttps://www.dropbox.com/s/vdzojnt3mfj6d6p/%20John%20Dewey%20and%20International%20Interdependence.docx?dl=0

Henry Farrell, Hugo Mercier, & Melissa Schwartzberg: No-B*t Democracy* https://twitter.com/henryfarrell/status/1059185019246338050?lang=en

Alexander Hamilton: Federalist 9 https://avalon.law.yale.edu/18th_century/fed09.asp

Daniel Kahneman, Olivier Sibony, & Cass Sunstein: Noise https://www.google.com/books/edition/Noise/vCZMzQEACAAJ?hl=en

Philip Kitcher: Science in a Democratic Society https://www.google.com/search?tbm=bks&hl=en&q=RtFDxx0sbTIC

Hugo Mercier & Dan Sperber: The Enigma of Reason https://www.google.com/books/edition/The_Enigma_of_Reason/hjtYDgAAQBAJ

Michael Neblo, Kevin Esterling, & David Lazar: Politics with the People: Building a Directly Representative Democracy https://www.amazon.com/Politics-People-Representative-Democracy-Psychology-ebook-dp-B07GNM4SM6/

Josiah Ober: Democracy and Knowledge: Innovation and Learning in Classical Athens https://www.google.com/books/edition/Democracy_and_Knowledge/Jge0MlZTKhQC

Melissa Schwartzberg: Epistemic Democracy and Its Challenges <https://doi.org/10.1146/annurev-polisci-110113-121908>

Ilya Somin: Democracy and Political Ignorance: Why Smaller Government Is Smarter https://www.google.com/books/edition/Democracy_and_Political_Ignorance/7cQ6AAAAQBAJ

Richard Thaler & Cass Sunstein: Nudges: Improving Decisions about Health, Wealth and Happiness https://www.google.com/books/edition/Nudge/lgFLOAAACAAJ?hl=en

&, of course:

Vernor Vinge: A Fire Upon the Deep https://books.google.com/books?id=fCCWWgZ7d6UC

Alexander Hamilton: ‘It is impossible to read the history of the petty republics of Greece and Italy without feeling sensations of horror and disgust at the distractions with which they were continually agitated, and at the rapid succession of revolutions by which they were kept in a state of perpetual vibration between the extremes of tyranny and anarchy. If they exhibit occasional calms, these only serve as short-lived contrast to the furious storms that are to succeed. If now and then intervals of felicity open to view, we behold them with a mixture of regret, arising from the reflection that the pleasing scenes before us are soon to be overwhelmed by the tempestuous waves of sedition and party rage. If momentary rays of glory break forth from the gloom, while they dazzle us with a transient and fleeting brilliancy, they at the same time admonish us to lament that the vices of government should pervert the direction and tarnish the lustre of those bright talents and exalted endowments for which the favored soils that produced them have been so justly celebrated.

From the disorders that disfigure the annals of those republics the advocates of despotism have drawn arguments, not only against the forms of republican government, but against the very principles of civil liberty. They have decried all free government as inconsistent with the order of society, and have indulged themselves in malicious exultation over its friends and partisans…. It is not to be denied that the portraits they have sketched of republican government were too just copies of the originals from which they were taken. If it had been found impracticable to have devised models of a more perfect structure, the enlightened friends to liberty would have been obliged to abandon the cause of that species of government as indefensible.

The science of politics, however, like most other sciences, has received great improvement. The efficacy of various principles is now well understood, which were either not known at all, or imperfectly known to the ancients. The regular distribution of power into distinct departments; the introduction of legislative balances and checks; the institution of courts composed of judges holding their offices during good behavior; the representation of the people in the legislature by deputies of their own election: these are wholly new discoveries, or have made their principal progress towards perfection in modern times. They are means, and powerful means, by which the excellences of republican government may be retained and its imperfections lessened or avoided…

Henry Farrell, Hugo Mercier, & Melissa Schwartzberg: No-B*t Democracy: ‘*Over the last decade a prominent academic literature tied to libertarian thought has argued that democracy is generally inferior to other forms of collective problem-solving such as markets and the rule of cognitive elites (Caplan 2007, Somin 2016, Brennan 2016). These skeptics appeal to findings in cognitive and social psychology, and political behavior, to claim that decision-making by ordinary citizens is unlikely to be rational or well-grounded in evidence. Their arguments have received prominent media coverage (Crain 2016), and have been repeated in conservative critiques of democratic voting (Mathis-Lilley 2021), while provoking rejoinders from political theorists whose “epistemic” account of the benefits of democracy invokes mechanisms such as deliberation, the Condorcet Jury Theorem, and the “Diversity Trumps Ability” theorem (Landemore 2013; Schwartzberg 2015).

This debate has been largely unproductive…. We set out a different approach. We show that democratic skeptics’ claims tend to rest on partial, inaccurate, and outdated understandings of human cognition. However, we do not retort with a general defense of democracy on cognitive or epistemological grounds. Instead, we advocate a scientific program investigating the conditions under which specific democratic institutions do better or worse in discovering solutions to collective problems, building in particular on results in experimental psychology…

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Brad DeLong: INTERVIEW: Inflation Concerns in the US Following Secretary Treasury Janet: ‘Apple Podcasts: tbs eFM This Morning: 0514 IN FOCUS… https://podcasts.apple.com/kr/podcast/0514-in-focus-2-inflation-concerns-in-us-following/id1038822609?i=1000521665790&l=en

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Key Insights:

Economic arguments against higher taxes that may have been somewhat plausible back in the days of 70% or so maximum individual and 40% or so maximum capital gains tax rates simply do not apply now.

Right-wing parties that don't think they can credibly make the argument that cosseting their core constituencies is necessary for rapid economic growth search for some non-economic cleavage in which the rich and the right-thinking poor, or the right-colored poor, can be on one side and the people who seek a fairer and more equal distribution of income and higher taxes on the rich can be put on the other—let's all yell about critical race theory, and maybe they won't pay attention to the fact that we just, you know, take everybody's money.

Capital to fund investment is really not a big constraint right now—incentivizing savings in financial assets really is just pushing on a string.

Companies with investments that have high societal value in expansion need to be properly incentivized—either by the smell of more profits next year from serving a larger market with lower costs of production through larger scale, or through the government paying and so getting prices righter than the free market gets them.

“Doge coin” is pronounced with a soft “g” sound.

No, Doge coin is not named after the title of the head of state of the Venetian Republic

Doge coin’s name comes from the Homestar Runner line: “I want a doge”…

Hexapodia!

References:

Len Burman (2021): Biden Would Close Giant Capital Gains Loopholes—At Least For The Rich https://www.taxpolicycenter.org/taxvox/biden-would-close-giant-capital-gains-loopholes-least-rich

Peter Diamond & James Mirrlees (1971): Optimal Taxation and Public Production I: Production Efficiency https://www.jstor.org/stable/1910538

Peter Diamond & James Mirrlees (1971): Optimal Taxation and Public Production II: Tax Rules https://assets.aeaweb.org/asset-server/journals/aer/top20/61.3.261-278.pdf

Ken Judd (1999): Optimal Taxation and Spending in General Competitive Growth Models http://darp.lse.ac.uk/PapersDB/Judd_(JPubE_99).pdf

Paul Krugman (2021): Why Doesn’t Cutting Taxes on the Wealthy Work? <https://www.nytimes.com/2021/04/30/opinion/tax-cuts-rich.html>

Jacob Lundberg & Johannes Nathell (2021): Tax Burden on Capital Income: International Comparison https://taxfoundation.org/tax-burden-on-capital-income/

Robert McClelland (2021): Avoiding Biden’s Proposed Capital Gains Tax Hikes Won’t Be So Easy. Or Will It? https://www.taxpolicycenter.org/taxvox/avoiding-bidens-proposed-capital-gains-tax-hikes-wont-be-so-easy-or-will-it

Alicia Munnell (2021): Biden’s Plan to Fully Tax Capital Gains Is Good Policyhttps://www.marketwatch.com/story/bidens-plan-to-fully-tax-capital-gains-is-good-policy-11620658190

Garrett Watson & Erica York (2021): Capital Gain Rates Under Biden Tax Planhttps://taxfoundation.org/biden-capital-gains-tax-rates/

Thomas Piketty & Emmanuel Saez (2012): A Theory of Optimal Capital Taxation http://gesd.free.fr/w17989.pdf

Ludwig Straub & Ivan Werning (2020): Positive Long-Run Capital Taxation: Chamley-Judd Revisited <https://www.aeaweb.org/articles?id=10.1257/aer.20150210>

Tax Foundation (2017): Preliminary Details and Analysis of the Tax Cuts and Jobs Act https://taxfoundation.org/final-tax-cuts-and-jobs-act-details-analysis/

&, of course:

Vernor Vinge: A Fire Upon the Deep https://books.google.com/books?id=fCCWWgZ7d6UC

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Key Insights:

Cory Doctorow is AWESOME!

It is depressing. We once, with the creation of the market economy, got interoperability right. But now the political economy blocks us from there being any obvious path to an equivalent lucky historical accident in our future.

The problems in our society are not diametrically opposed: Addressing the problems of one thing doesn't necessarily create equal and opposite problems on the other side—but it does change the trade-offs, and so things become very complex and very difficult to solve.

Always keep a trash bag in your car.

Hexapodia!

References:

Books:

Cory Doctorow: How to Destroy Surveillance Capitalism https://www.google.com/books/edition/How_to_Destroy_Surveillance_Capitalism/W20NzgEACAAJ

Cory Doctorow: Attack Surface https://www.google.com/books/edition/Attack_Surface/rFfEDwAAQBAJ

Cory Doctorow: Walkaway https://www.google.com/books/edition/Walkaway/MKMsDAAAQBAJ

Cory Doctorow: Down & Out in the Magic Kingdom https://www.google.com/books/edition/Down_and_Out_in_the_Magic_Kingdom/h8DvDwAAQBA

Cory Doctorow: Little Brother https://www.google.com/books/edition/Little_Brother/r1zne2mZDW8C

William Flesch:Comeuppance: Costly Signaling, Altruistic Punishment, and Other Biological Components of Fiction https://www.google.com/books/edition/Comeuppance/JSRWPYp1nNUC

Daniel L. Rubinfeld: A Retrospective on U.S. v. Microsoft: Why Does It Resonate Today? https://journals.sagepub.com/doi/abs/10.1177/0003603X20950227

Louis Galambos & Peter Temin: The Fall of the Bell System: A Study in Prices & Politics https://www.google.com/books/edition/The_Fall_of_the_Bell_System/CXNPVjdxfAEC

Websites:

Electronic Frontier Foundation: http://www.eff.org

Adversarial Interop Case Studies: https://www.eff.org/deeplinks/2019/10/adversarial-interoperability

Privacy without Monopoly: https://www.eff.org/wp/interoperability-and-privacy

Cory Doctorow: Craphound <http://craphound.net>

Cory Doctorow: Pluralistic https://pluralistic.net

&, of course:

Vernor Vinge: A Fire Upon the Deep https://books.google.com/books?id=fCCWWgZ7d6UC

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There’s a free email list. There’s a paid-subscription list with (at the moment, only a few) extras too.)

Grammatized Transcript:

Brad: Noah! What is the key insight?

Noah: Hexapodia is the key insight! Six feet!

Brad: And what is that supposed to mean?

Noah: That there is some nugget of fact that, if you grasp it correctly and place it in the proper context, will transform your view of the situation and allow you to grok it completely.

Brad: And in the context of Vernor Vinge’s amazing and mind-Bending science-fiction space-opera novel A Fire Upon the Deep?

Noah: The importance of “hexapodia” is that those sapient bushes…

Brad: …riding around on six wheeled scooters have been genetically…

Noah: …programmed to be a fifth column of spies and agents for the Great Evil.

Brad: However, here we seek different key insights than “hexapodia”. Today we seek them from the genius science-fiction author and social commentator Cory Doctorow. I think of him as—it was Patrick Nielsen Hayden, I think, who said around 2004: that he felt like he was living in the future of Scottish science fiction author, Ken MacLeod. And he wished Ken would just stop. At times I feel that way about Cory. But we are very happy to have him here. His latest book is How to Destroy Surveillance Capitalism IIRC, his latest fiction is Attack Surface. My favorite two books of his are Walkaway and—I think it was your first—Down & Out in the Magic Kingdom.

Cory: That's right. Yes. Thank you. Thank you for that very effusive introduction. I decry all claims of genius, though.

Brad: Well, we know this is a problem. When one is dealing with an author whose work one has read a lot of—by reading your books.by now I've spent forty hours of my life looking at squiggles on a page or on a screen and, through a complicated mental process, downloaded to my wetware and then run on it a program that is my image of a sub-Turing instantiation of your mind, who has then told me many very entertaining and excellent stories. So I feel like I know you very well…

Cory: There’s this infamous and very funny old auto reply that Neal Stephenson used to send to people who emailed him. It basically went: “Ah, I get it. You feel like you were next to me when we were with Hero Protagonist in Alaska fighting off the right-wing militias. But while you were there with me, I wasn't there with you. And so I understand why you want to, like, sit around and talk about our old military campaigns. But I wasn't on that campaign with you.

Brad: Yes. It was only my own imago, my created sub-Turing instantiation of your mind that was there…

Cory: Indeed. We are getting off of interoperability, which is what I think we're mostly going to talk about. But this is my cogpsy theory of why fiction works, and where the fanfic dispute comes from.

Writers have this very precious thing they say. It is: “I'm writing and I'm writing and all of a sudden the characters start telling me what they want to do.” I think that what they actually mean by that is that we all have this completely automatic process by which we try and create models of the people we encounter. Sometimes we never encounter those people. We just encounter second-hand evidence of them. Sometimes those people don't live at all. Think about the people who feel great empathy for imaginary people that cruel catfishers have invented on the internet to document their imaginary battles with cancer. They then feel deeply hurt and betrayed and confused, when this person they've come to empathize with turns out to be a figment of someone else's imagination.

I think what happens when you write is that you generate this optical link between two parts of your brain that don't normally talk to each other. There are these words that you are explicitly thinking up that show up on your screen. And then those words are being processed by your eyeballs and being turned into fodder for a model in this very naive way. And then the model gets enough flesh on the bones—so it starts telling you what it wants to do. At this point you are basically breathing your own exhaust fumes here. But it really does take what is at first a somewhat embarrassing process of putting on a puppet show for yourself: “Like, everybody, let’s go on a quest!” “That sounds great!” “Here we go!” It just becomes something where you don't feel like you're explicitly telling yourself a story.

Now the corollary of this is that it sort of explains the mystery of why we like stories, right? Why we have these completely involuntary, emotional responses to the imaginary experiences of people who never lived and died and have no consequence. The most tragic death in literature of Romeo and Juliet is as nothing next to the death of the yogurt I digested with breakfast this morning, because that yogurt was alive and now it's dead and Romeo and Juliet never lived, never died, nothing that happened to them happened. Yet you hear about the Romeo and Juliet…

Noah: …except that a human reads about Romeo and Juliet and cares…

Cory: That is where it matters, yes indeed. But the mechanism by which we care is our build this model which is then subjected to the author's torments, and then we feel empathy for the model. What that means is that the readers, when they're done, if the book hit its aesthetic marks, if it did the thing that literature does to make it aesthetically pleasing—then the reader still has a persistent model in the same way that if your granny dies, you still have a model of your granny, right? You are still there.

That is why fanfic exists. The characters continue to have imagined lives. If the characters don't go on having imagined lives, then the book never landed for you.

And that’s why authors get so pissy about fanfic. They too have this model that they didn't set out to explicitly create, but it's there. And it's important to their writing process. And if someone is putting data in about that modeled person that is not consistent with the author's own perception of them, that creates enormous dissonance. I think that if we understood this, we would stop arguing about fanfic.

Noah: We argue about fanfic?

Brad: Oh yes, there are people who do. I remember—in some sense, the most precious thing I ever read was Jo Walton saying that she believed that Ursula K. LeGuin did not understand her own dragons at all…

Noah: …Yep, correct…

Cory: Poppy Bright—back when Poppy Bright was using that name and had that gender identity—was kicked out of a fan group for Poppy Bright fans on LiveJournal for not understanding Poppy Bright’s literature. I think that's completely true. Ray Bradbury to his dying day insisted that Fahrenheit 451 had nothing to do with censorship but was about the dangers of television…

Brad: Fanfic is an old and wonderful tradition. It goes back to Virgil, right? What is the Aeneid but Iliad fanfic?

Cory: And what is Genesis but Babylonian fanfic? It goes a lot further back than that…

Brad: Today, however, we are here to talk not about humans as narrative-loving animals, not about the sheer weirdness of all the things that we run on our wetware, but about “mandated interoperability”, and similar things—how we are actually going to try to get a handle on the information and attention network economy that we are building out in a more bizarre and irrational way than I would have ever thought possible.

Cory: Yes. I don't know if the audience will see this, but the title that you've chosen is: “Mandated Interoperability Is Not Going to Work”. I am more interested in how we make mandated interoperability work. I don't think it's a dead letter. I think that to understand what's what's happened you have to understand that the main efficiency that large firms bring to the market is regulatory capture. In an industry with only four or five major companies, all of the executives almost by definition must have worked at one or two of the other ones. Think of Sheryl Sandberg, moving from Google to Facebook.

They form an emerging consensus. Sometimes they all sit around the same a boardroom table. Remember that photo of the tech leaders around the table at the top of Trump Tower? They converge on a set of overlapping lobbying priorities. They have a lot of excess rents that they can extract to mobilize lobbying in favor of that. One of the things that these firms have done in the forty years of the tech industry is to move from a posture where they were all upstarts and were foursquare for interoperability with the existing platforms—because they understood that things like network advantages were mostly important in as much as they conferred a penalty for switching, and that if you could switch easily then the network advantage disappeared. If you could read Microsoft Office documents on a Mac, then the fact that there's a huge network effect of Microsoft Office documents out there is irrelevant. Why? Because you can just run switch ads, and say every document ever created with Microsoft Office is now a reason to own a Mac.

But as they became dominant, and as their industries have become super-concentrated, they have swung against interoperability. I think that we need a couple of remedies for that. I think that we need some orderly structured remedies in the forms of standards. We need to check whether or not those standards are mandated. And we’ve seen how those standards can be subverted. And so I think we need something that stops dominant firms from subverting standards—a penalty that they pay that is market-based, that impacts their bottom line, and that doesn't rely on a slow-moving or possibly captured regulator but that, instead, can actually just emerge in real time.

That is what I call “adversarial interoperability”: reverse engineering and scraping and bots. Steve Jobs paying some engineers to reverse engineer Microsoft Office file formats and make iWork suite, instead of begging Bill Gates to rescue the Mac…

Brad: …But he did beg Bill Gates to rescue the Mac…

Cory: He did that as well. But that wasn't the whole story. He had a carrot and a stick. He had: let's have a managed, structured market. Right. And then he had: what happens if you don't come up to my standards is that we have alternatives, because we can just reverse-engineer your stuff. Look at, for example, the way that we standardized the formatting of personal finance information. There were standards that no one adopted. Then Mint came along, and they wrote bots, and you would give the bots your login credentials for your bank, and they would go and scrape your account data and put it into a single unified interface.

This was adversarial interoperability. This spurred the banks to actually come into compliance with the standard. Rather than having this guerrilla warfare, they wanted a quantifiable business process that they could understand from year to year that wouldn't throw a lot of surprises that would disrupt their other other plans.

Brad: Let me back up: In the beginning, the spirit of Charles Babbage moved upon the face of the waters, and Babbage said: “Let there be electromechanical calculating devices”. And there was IBM. And IBM then bred with DARPA in the form of the Sage Air Defense, and begat generation upon generation of programmers. And from them was born FORTRAN and System 360.

And FORTRAN and IBM System 360 bestrode the world like the giants of the Nephilim, and Babbage saw it, and it was good. And there was nibbling around the edges from Digital Equipment and Data General.

Yea, until one day out of Silicon Valley, there emerged crystallized sand doped with germanium atoms, and everything was upset as out of CERN and there emerged the http protocol. All the companies that had been construct their own walled information gardens, and requiring you to sign up with AOL and CompuServe and Genie and four or five others in order to access databases through gopher and whatever—they found themselves overwhelmed by the interoperability tide of the internet.

And for fifteen years there was interoperability and openness and http and rss, and everyone frantically trying to make their things as interoperable as possible so that they could get their share of this absolutely exploding network of human creativity and ideas.

And then it all stopped. People turned on a dime. They began building their own walled gardens again.

Noah: I feel like we did just get Neal Stephenson on this podcast…

Brad: Sub-Turing! It's a sub-Turing instantiation of a Neal Stephenson imago!

Cory: I think that your point of view or generational outlook or whatever creates a different lens than mine. I think about it like this: In 1979 we got an Apple II+. In 1980, we got a modem card for it. Right. By 1982, there were a lot of BBS’s and that was great. Even though we were in Canada, the BBS software was coming up from the American market. We had local dial-up BBS's running software that was being mailed around on floppies…

Brad: Whish whish whine… Beep beep… Whish… I am trying to make modem noises…

Cory: that sounded like V.42bis.

And then by 1984 there were the PC clones. Everyone had a computer. This company that no one had ever heard of—Microsoft—suddenly grew very big. They created this dynamism in the industry. You could have a big old giant, like IBM. You could have two guys in a garage, like Microsoft. The one could eclipse the other. IBM couldn't even keep control of its PCs. They were being cloned left and right. And then Microsoft became the thing that had slain. It became a giant. And the DOJ intervened. Even though Microsoft won the suit ultimately—they weren't broken up…

Brad: They did back off from destroying Google…

Cory: What’s missing from that account is the specific mechanisms. We got modems because we got cheap, long distance. We got that because 1982 we had the ATT breakup. Leading up to the breakup shifted the microeconomics. People ATT were all: don’t do that. It's going to piss off the enforcers. We've got this breakup to deal with

Brad: Yes. The enforcers, the enforcers are important. Both the Modification of Final Judgment. And ATT’s anticipatory reaction to it. Plus the periodic attempted antitrust kneecappings of IBM. They meant that when people in IBM turned around and said: “Wait a minute. When we started the PC project, John F. Akers told us we needed to find something for Mary Gates’s boy Bill to do, because he sat next to her at United Way board meetings. But this is turning into a monster. We need to squelch them.” And from the C-suite came down: “No, our antitrust position is sufficiently fraught that we can't move to squash Microsoft.”

Cory: Yes. IBM spent 12 years in antitrust litigation. Hell, they called it. Antitrust as Vietnam. They essentially had been tied by the ankles to the back of DOJ’s bumper and dragged up and down a gravel road for 12 years. They were outspending the entire DOJ legal department every single year for that one case. And one of the things that DOJ really didn't like about IBM was tying software to hardware.

And so when Phoenix makes the IBM ROM clone, IBM is like: Yeah, whatever. Any costs we pay because of the clone ROM are going to be lower than the costs we will incur if we get back into antitrust hell—and the same goes for Microsoft. They got scared off. What we were seeing, what it felt like, the optimism that I think we felt and of which we were aware was—it looked like we'd have protocols and not products, and we'd have a pluralistic internet, not five giant websites filled with screenshots of text from the other.

But our misapprehension was not due to technological factors. It was our failing to understand that like Bork and Reagan had shivved antitrust in the guts in 1980, and it was bleeding out. So by the time Google was big enough to do to everyone else what Microsoft had not been able to do to them, there was no one there to stop Google.

Noah: Cory, let me ask a question here. I'm the designated grump of the podcast. Brad is the designated history expounder. I want to know: Why do we care right right now? I've written about interoperability with regards to electric cars and other emerging technologies. What things in the software world are people hurt by not having interoperability for? What are the big harms in software to consumers or to other stakeholders from lack of interoperability?

Cory: Let me frame the question before I answer it.

We have market concentration in lots of different sectors for similar reasons, mergers. We should have different remedies for them. We heard about Babbage. I would talk about Turing and the universality of the computer. Interoperability represents a pro-competitive remedy to anti-competitive practices that is distinct and specific to computers.

I don't know if you folks know about the middle-gauge muddle in Australia. Independent states and would-be rail barons laid their own gauge rail across the country. You can't get a piece of rolling stock from one edge of the country to the other. For 150 years they have been trying to build designs that can drop one set of wheels where the track needs it. And none of them have worked. And now their solution is to tear up rails and put down new rails.

If that was a software object, we just write a compatibility layer. Where we have these durable anti-competitive effects in the physical world, that sometimes necessitate these very difficult remedies, we can actually facilitate decentralized remedies where people can seize the means of computation to create digital remedies: self-determination, the right to decide how to talk to their friends and under what circumstances, as opposed to being forced to choose between being a social person and being private…

Brad: For me, at least there are lots and lots of frictions that keep me from seeing things that I would like to see, and keep me from cross-referencing things that I would like to cross-references. There are bunches of things I've seen on Twitter and Facebook in the past that, because they are inside the walled gardens. I definitely am not able to get them out quickly and easily and cheaply enough to put them into the wider ideas flow. And I feel stupider as a result. And then there are all the people who have been trapped by their own kind of cognitive functioning, so that they are now a bunch of zombies with eyeballs glued to the screen being fed terror so that they can be sold fake diabetes cures and overpriced gold funds…

Noah: That’s a good angle right here. If we look at the real harms that are coming through the internet right now—I worry about Kill Zones, and of course I worry about the next cool thing getting swallowed up by predatory acquisitions. That's our legitimate worry for sure. When I look at the internet and what bad the internet is causing, I do not see the lack of alternative information sources as the biggest problem. I see the people who are the biggest problem as coming precisely from alternative information sources.

This is not to say we should get rid of those sources. This is not to say we should have mass censorship and ban all the anti-vax sites. I'm not saying that.

But if we look at the issues—there was a mass banning of Trump and many of the Q-Anons from the main social media websites, and yet a vast underground network of alternative right wing media has sprung up.

Cory: It seems like they were able to. Let me redirect from the harms that Brad raised. I think those are perfectly good harms. But I want to go to some broader harms.

In the purely digital online world, we had some people we advised at EFF who were part of a medical cancer previvor group—people who have a gene that indicates a very high likelihood of cancer, women. They had been aggressively courted by Facebook at a time when they were trying to grow up their medical communities. And one of the members of this group who wasn't a security researcher or anything was just noodling around on Facebook, and found that you could enumerate the membership of every group on Facebook, including hers. She reported that to Facebook. That's obviously a really significant potential harm to people in the medical communities. She reported it to Facebook. Facebook characterized her report as a feature request and won't fix it. She made more of a stink. They said: fine, we're going to do a partial fix because it would have interfered with their ad-tech stack to do a full fix. So you have to be a member of a group to enumerate the group. This was still insufficient.

But they had this big problem with inertia—with the collective action problem of getting everyone who's now on Facebook to leave Facebook and go somewhere else. They were all holding each other mutually hostage. Now you could imagine that they could have set up a Diaspora instance, and they could have either had a mandated- or standards-defined interface that allowed those people to talk to their friends on Facebook. And they could have a little footer at the bottom of each message: today 22% of the traffic in this group originated on our diaspora, once that tips to 60% were all leaving, and quitting Facebook. They might do this with a bot, without Facebook's cooperation, in the absence of Facebook's legal right to prevent those bots.

Facebook has weaponized the computer fraud and abuse act and other laws to prevent people from making these bots to allow them to inter-operate with Facebook—even though, when Facebook started, the way that it dealt with its issues with MySpace was creating MySpace spots, where you could input your login and password, and it would get your waiting MySpace messages and put them in your Facebook inbox and let you reply to them. Facebook has since sued Power Ventures for doing the same thing. They’re engaged in legal activity against other bot producers that are doing beneficial pro-user things.

That's one harm.

Another harm that I think is really important here is repair. Independent repairs are about 5% of US GDP. The lack of access to repair is of particular harm to people who are already harmed the most: it raises the cost of being poor. The ability to control repair is a source of windfall profits. Tim Cook advised his investors in 2019, the year after he killed twenty right-to-repair bills at these state level, that the biggest threat to Apple's profits was that people were fixing their devices instead of throwing them away. It’s an environmental problem, and so on. The biggest problem with right-to-repair is not that the companies don't provide their data or the diagnostic codes or encrypt diagnostic codes. The problem is that you face felony prosecution under the CFAA and DMCA, as well as ancillary stuff like non-compete and non-disclosure, and so on through federal trade secrecy law, if you create tools to repairs without the cooperation of the vendors. This is a real harm that arises out of the rules that have been exploited to block interoperability.

Brad: This goes deep, right? This affects not just tech but the world, or, rather, because tech has eaten the world, hard-right unsympathetic state representatives from rural Missouri are incredibly exercised about right-to-repair, and the fact that John Deere does not have enough internal capacity to repair all the tractors that need to be repaired in the three weeks before the most critical-need part of the year.

Cory: This is an important fracture line. There are people who have a purely instrumental view: me my constituents need tractor repair, so I will do whatever it takes to get them tractor repair. In California we got a terrible compromise on this brokered with John Deere—it was basically a conduct remedy instead of a structural change. Right.

Something I questioned a lot about Klobuchar’s antitrust story is that she keeps saying: I believe that we need to jettison the 40-year consumer-welfare standard and return to a more muscular antitrust that is predicated on social harms that include other stakeholders besides consumers paying higher prices, and I have a bipartisan consensus on this because Josh Hawley agrees with me, but Josh Hawley does not agree with her. Josh Hawley just wants to get Alex Jones back on Twitter, right. And that's like, it begins and ends there.

She might be able to get the inertia going where Josh Hawley is put in the bind where he either has to brief for a more broad antitrust cause of action that includes social harms, or he has to abandon Alex Jones to not being on Twitter. And maybe he'll take Alex Jones if that's the price. But I do think that that's a huge fracture line, that there are honest brokers who don't care about the underlying principle and the long run effects of bad policy. And there are people who just want to fix something for a political point or immediate benefit.

Brad: Fixing it to the extent that fixing something scores a political point—that does mean actually doing good things for your constituents, who include not just Alex Jones, but the guys in rural Missouri who want their John Deere tractors repaired cheaply.

Cory: This is how I feel about de platforming. I was angry about deplatforming for 10 years, when it was pipeline activists and sex workers and drag queens who were being forced to use their real name, and trans people were forced to use their dead names, and political dissidents in countries where they could be rounded up and tortured and murdered if they adhere to Facebook’s real names policy, and all of that stuff. First they came for the drag queens, and I said nothing because I wasn't a drag queen. Then they came for the far right conspiratorialists.

But they're fair-weather friends.

It's like the split between open source and free software where, you know, the benefits of technological self-determination were subsumed into the instrumental benefits of having access to the source so you could improve it. What we have is free software for the tech monopolists, for they can see the source and modify the source of everything on their backend. And we have open source for the rest of us. We can inspect the source, we can improve their software for them, but we don't get to choose how their backends run. And since everything loops through their backends, we no longer have software freedom. That's the risk if you decouple instrumental from ethical propositions. You can end up with a purely instrumental fix that leaves the ethical things that worry you untouched, and in fact in a declining spiral.

Noah: I want to argue. I don’t think we don't get enough argument on this podcast. I want to inject a little here.

A turning point for my generation in terms of our use of the internet was Gamergate. That happened in 2014. Gamergate largely morphed after that into the the Trump movement and the alt-right. Gamergate destroyed what I knew as online nerd culture. It was an extinction-level event for the idea that nerd culture existed apart from the rest of society. It was a terrible thing. Maybe nerd culture couldn't have lasted, but a giant subculture that I enjoyed and partially defined myself by as a young person was gone. And not only that, not only me—I’m centering myself and making all about me here, but a lot of people got harassed. Some good friends of mine got harassed. It was really terrible as an event in and of itself, irrespective of the long-term effects.

Even Moot, a big, huge defender of anonymity and free speech, eventually banned Gamergate topics from 4chan. That was the moment when I realized that the idea of free speech as free speech guarded by individual forums or platforms separately from the government—that that idea was dead. When Moot banned banned Gamergate from 4chan, I said: okay, we're in a different era. That was the Edward R Murrow moment. That was the moment we started going back toward Dan Rather and Edward R Murrow and the big three television companies in the 1950s—when Moot banned Gamergate.

Maybe this just has to happen. Maybe bad actors are able to always co-opt a fragmented internet. There’s no amount of individual Nazi punching that can get the Nazis out. If you have people whose speech is entirely focused on destroying other people's right to speak, as Gamergate was, then then free speech means nothing because no one feels free to speak. I wonder whether fragmentation of platforms makes it harder to police things like Gamergate and thus causes Nazis to fractally permeate each little space on the internet and every little pool of the internet. Wherever we have one big pool, we have economies of scale in guarding that pool.

Brad: That is: what you are saying is that an information world of just four monopolistic, highly oligopolistic, walled gardens is bad, but an internet in which you cannot build any wall around your garden is bad as well. Then what we really need is a hundred walled gardens blooming, perhaps. But I want to hear what Cory has to say about this and interoperability.

Cory: I found that so interesting. I had to get out some, no paper and take notes.

First of all, I would trace back before the Gamergate issue. Before it was the Sad Puppies, the disruption of the Hugo awards by far-right authors was before Gamergate. It was the same ringleaders. Gamergate was the second act of sad puppies. So I'm there with you.

I was raised by Trotskyists. I want to say that, listening to you describe how you feel about nerd culture after you discovered that half of your colleagues and friends were violent misogynists—it sounds a lot like how Trotskyists talk about Stalinists, right. You have just recounted the the internet nerd version of Homage to Catalonia. Orwell goes to Spain to fight the fascist and a Stalinist shoots him through the throat.

We in outsider or insurgent or subcultural movements often have within our conception of a group people who share some characteristics and diverge on others. We paper over those divergences until they fracture. Think about the punk Nazi-punk split. This anti-authoritarian movement is united around a common aesthetic and music and a shared cultural identity. And there's this political authoritarian anti-authoritarian things sitting in the middle. And they just don't talk about it until they start talking about it—Dead Kennedys record: Nazi punks f-—- off. And here we are, still in the midst of that reckoning. That's where Stormfront comes from and all the rest of it.

This is not distinct to the internet. It is probably unrealistic, it's definitely unrealistic for there to be a regime in which conduct that is lawful can find no home. Not that not that it won't happen in your home, but that it won't happen in anyone's home. The normative remedy where we just make some conduct that is lawful so far beyond the pale that everyone ceases to engage in it—that has never really existed. Right. You can see that with conduct that we might welcome today, as you know, socially fine and conduct that we dislike—whether that's, you know, polyamory. You go back to the future house, where Judy Merrill and, and Fred Pohl and C.M. Kornbluth lived in the thirties, and they had this big, weird polyamorous household of leftist science fiction writers write at a time when it was unmentionably weird to do it. And today it's pretty mainstream—at least in some parts of California.

In the absence of an actual law against it, it's probably going to happen. The first question is: is our response to people who have odious ideas that we want there to be nowhere where they can talk about it? If that's the case, we'll probably have to make a law against them.

Noah: Right. But hold on. Is it ideas, or is it actions? If you harass someone you're not expressing an idea, you're stopping them from expressing theirs.

Cory: Absolutely. So, so the issue is: that there are Nazis talking to other Nazis is okay. It's just that when Nazis talked to other Nazis and figured out how to go harass someone. Let me give you an example of someone I know who is in the midst of one of these harassment campaigns.

Now there's a brilliant writer, a librettist, novelist, and comics author named Cecile Castellucci. She also used to be like a pioneering Riot Girl and toured with Sloan. So she's just this great polymath person. And because she's a woman who writes comics, men on the internet hate her. And there's a small and dedicated cadre of these men who figured out a way to mess with women on Twitter. They send you a DM that is really violent and disgusting. They wait until they see the read receipt, and then they delete it. Twitter, to its credit, will not accept screenshotted DMs as evidence of harassment, because it would be very easy for those same men to forge DMs from their targets and get those people kicked off Twitter. Then what they do is they revictimize their targets by making public timeline mentions that comport with Twitter's rules unless you've seen the private message. And they make references to the private message that trigger the emotions from the private message over and over again.

It is a really effective harassment technique.

The women they use it against are stuck on Twitter, because their professional lives require them to be on Twitter, right. Their careers would end to some important degree if they weren't part of this conversation on Twitter.

Now, imagine if you had Gotham Clock Tower, Barbara Gordon's secret home, which was a Mastodon instance that was federated with Twitter, either through a standard or through a mandate or through adversarial interoperability. There could be a dozen women there who could agree that among themselves that they're willing to treat screenshotted DMs as evidence of harassment, so that they could block and silence and erase the all presence of these horrible men. We'd still want Twitter to do something about them, but if some of those men slipped through Twitter’s defenses as they will, not just because they can't catch everyone when they're at the scale, but because the range of normal activities at scale is so broad: a hundred million people have a hundred and one million use cases every day. Then those people are that, that those people could still be on Twitter, but not subject to the harassment of Twitter. It's a way for them.

Maybe, in the way that we talk about states being democracy's laboratories, maybe these satellite communities could pioneer moderation techniques that range beyond takedowns or account terminations or warning labels. There are so many different ways we could deal with this. You could render some comments automatically in Comic Sans. They could try them and see if they work. And they could be adopted back into main Twitter. That's what self-determination gets you: it gets you the right to set the rules of your discourse, and it gets you the right to decide who you trust to be within the group of people who make those rules.

Brad: So if we had the real interoperable world, we would have lots that would screen things according to someone's preferences. And you could sign up to have that bot included in your particular bot list to pre-process and filter, so that you don't have to wade through the garbage.

Cory: Sure. And there might be some conduct that we consider so far beyond the pale that we actually criminalize it. Then we can take the platforms where that conduct routinely takes place and things like reforms to 230 would cease to be nearly so important. We would be saying that if you are abetting unlawful conduct, when we see a remedy for preventing this unlawful conduct, and you refusing to implement that remedy, we might defenestrate you. We might do something worse.

Think of how the phone network works.It is standardized. There are these standard interchanges. There's lots of ways it can be abused. Every now and and then, from some Caribbean Island, we get a call that fakes a number from a Caribbean Island, and if you call it back, you're billed at $20 a minute for a long distance to have someone go: no, it was a wrong number. When that happens, the telco either cleans up its act or all the other telcos break their connection to it. There's certain conduct that's unlawful on the phone network, not unlawful because it cheats the phone company—not toll fraud—but unlawful because it's bad for the rest of the world, like calling bomb threats in. Either the customer gets terminated or the operator is disciplined by law.

All of those things can work without having to be in this in this regime where you have paternalistic control, where you vest all of your hope in a God-King who faces no penalty if he makes a bad call. They say: we’ll defend your privacy when the FBI wants to break the iPhone. But when they threaten to shut down our manufacturing, we'll let them spy on you even as they're opening up concentration camps and putting a million people in them.

Brad: Was that the real serpent in all of these walled gardens? Was the advertising-supported model the thing that turns your eyeballs into the commodity to be enserfed. If we had the heaven of micropayments, would we manage to avoid all of this?

Cory: We've had advertising for a long time. The toxicity of advertising is pretty new. Mostly what's toxic about advertising is surveillance, and not because I think the surveillance allows them to do feats of mind control. I think everyone who's ever claimed to have mind control turned out to be lying to themselves or everyone else. Certainly there is not a lot of evidence for it. You have these Facebook large-scale experiments: 60 million people subjected to a nonconsensual, psychological intervention to see if they can be convinced to vote. And you get 0.38% effect size. Facebook should be disqualified from running a lemonade stand if we catch them performing nonconsensual experiments on 60 million people. But, at the same time, 0.38% effect sizes are not mind control.

They do engage in a lot of surveillance. It’s super-harmful because it leaks, because it allows them to do digital redlining, because it allows them to reliably target fascists with messages that if they were uttered in public, where everyone could see them, might cause the advertiser to be in bad odor. They can take these dog whistles and they can whisper them to the people who won’t spread them around.

Those are real harms.

You have to ask yourself: why don't we have a privacy law that prohibits the nonconsensual gathering of data and imposes meaningful penalties on people who breach data? I was working in the EU. GDPR was passed. The commissioners I spoke to there said: no one has ever lobbied me as hard as I've been lobbied now. Right now we have more concentration in ad tech than in any other industry, I think, except for maybe eyeglasses, glass bottles, and professional wrestling.

Brad: Are we then reduced to: “Help us, Tim Cook! You are our only hope!”?

Cory: I think that that's wrong, because Tim Cook doesn't want to give you self-determination. Tim wants you to be subject to his determinations. Among those determinations are some good ones. He doesn't want Facebook to own your eyeballs. You go, Tim. But he also wants you to drop your iPhone in a shredder every 18 months, rather than getting it fixed.

Brad: Although I must say, looking at the M1 chip, I'm very tempted to take my laptop and throw it in the shredder today to force me to buy a new one.

Noah: It's interesting how iPhone conquered. And yet very few people still use Macs. Steve Jobs’s dream was never actualized.

Cory: Firms that are highly concentrated distort policy outcomes, and ad tech is highly concentrated. And we have some obviously distorted policy outcomes. We don't have a federal privacy law with a private right of action. There are no meaningful penalties for breaches. We understand that breaches have compounding effects. A breach that doesn't contain any data that is harmful to the user can be merged with another breach and together they can be harmful—and that's cumulative. And data has a long half-life.

Just this week, Ed Felton's old lab published a paper on how old phone numbers can be used to defeat two-factor authentication. You go through a breach, find all the phone numbers that are associated with the two-factor authentication. Then you can go to Verizon and ask: which of these phone numbers is available? Which of these people has changed their phone number? Then you can request that phone number on a new signup—and then you can break into their bank account and steal all their money. Old breaches are cumulative. Yet we still have this actual-damages regime for breaches instead of statutory damages that take account of the downstream effects and these unquantifiable risks that are imposed on the general public through the nonconsensual collection and retention of data under conditions that inevitably lead to breaches.

Brad: Okay. Well, I'm very down. So are we ready to end? I think we should end on this downer note.

Noah: My favorite Cory Doctorow books also end on a downer note.

Brad: Yes. Basically that the political economy does not allow us to move out of this particular fresh semi-hell in which we're embedded. But you had something to say?

Cory: Everybody hates monopolies now. So we'll just team up with the people angry about professional wrestling monopolies and eyeglass monopolies and beer monopolies, and we'll form a Prairie Fire United Front of people who will break the monopoly because we're all on the same side—even though we're fighting our different corners of it—the same way that ecology took people who cared about owls and put them on the side of people who care about ozone layers, even though charismatic, nocturnal birds are not the gaseous composition of the upper atmosphere.

Brad: Hey, if you have the charismatic megafauna on your side, you’re golden.

Noah: How did the original Prairie Fire work out? Let's let's wrap it up there. This is really great episode. Cory, you're awesome. Thanks so much for coming on and feel free to come back in time.

Cory: I’d love to. I've just turned in a book about money laundering and cryptocurrency—a noir cyberthreat thriller. Maybe when that comes out, I can come on and we can talk about that. That feels like it's up your guys' alley.

Brad: That would be great. Okay. So, as we end this: Noah, what is the key insight?

Noah: Hexapodia is the key insight. And what are the other key insights that we got from this day?

Brad: DeLong: I'm just depressed. I had a riff about how we got interoperability right with the creation of the market economy and the end of feudalism—and how that was a very lucky historical accident. But I don't see possibilities for an equivalent lucky historical accident in our future.

Noah: I have a key insight. It is a little vague, but hopefully it will be good fodder for future episodes. The problems in our society are not diametrically opposed. We have to find optimal interior-solution trade-offs between things that have a non-zero dot product. Sometimes solving the problem with one thing doesn't necessarily create exactly equal and opposite problems on the other side. Instead, it changes the trade-offs that you face with regard to other problems. These things become very complex. You have things like the antitrust problem and things like the Nazi problem. In your society addressing one doesn't necessarily worsen the other. More action against Nazis doesn't necessarily mean less action in antitrust. It's simply means you have to think about antitrust in a slightly different way, and vice versa. That does make these institutional problems very difficult to solve.

Brad: Cory, do you wish to add a key insight,

Cory: A key insight is: always keep a trash bag in your car.

Brad: This has been Brad DeLong and Noah Smith's podcast this week with the amazing Cory Doctorow. Thank you all very much for listening.

Get full access to Brad DeLong's Grasping Reality at braddelong.substack.com/subscribe

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Key Insights:

Getting the rate of profit—the sums that are charged businesses for renting machines and renting space, and for access to the generalized social power to deploy resources that is finance—right is a very, very important thing to do. Why? Because the market economy is a complicated institutional calculating machine for determining how to promote societal wellbeing. It cannot do its job if it cannot see the the constraints imposed on us by nature and current technology. And having the market get the profit rate right is a very important part of that. To say “it’s all ideology” or “it’s all power” or “it’s all distribution” and go the full Sraffa production-of-commodities-by-means-of-commodities is to miss a truly powerful, relevant, and important insight. That’s the strongest statement of what the Cambridge, Massachusetts-MIT side was really getting at—or ought to have been getting at, although they phrased it badly and inaccurately.

If we attempt to use toy mathematical models applied to macro aggregates to say anything quantitative about whether business owners are getting paid “too much” or “too little”, we will fail embarrassingly. Therefore we should never use toy models to do that.

To say that the market-equilibrium profit rate is the optimal one from the perspective of societal well-being is to commit the pseudo-pharisaical mistake of reversing the order of importance. Rather, recognize: the market was made for man, not man for the market.

The particular language in which the economists of the 1960s carried out this debate was extremely poorly suited to shed light. They cared deeply, they wrote angrily, and most of what they wrote was drivel. So: whenever you are having a discussion, if you want to learn or teach anything, first do this: try hard to figure out what issues really are, and then try hard to figure out what is the right language to talk about these issues.

As always, the key insight is: “Hexapodia”.

“It was not called the ‘net of a million lies’ for nothing…”

References:

Roger E. Backhouse: MIT & the Other Cambridge http://web.archive.org/web/20150906001312/http://paulromer.net/wp-content/uploads/2015/08/History-of-Political-Economy-2014-Backhouse-252-71.pdf

Christopher Bliss: Capital Theory & the Distribution of Income https://books.google.com/books?id=NzejBQAAQBAJ

Edwin Burmeister: On the Social Significance of the Reswitching Controversy
https://www.jstor.org/stable/24696693

Joan Robinson: The Production Function & the Theory of Capital http://theme.univ-paris1.fr/M1/hpe/HPEM1-TD4.pdf

Joan Robinson: Quotes https://www.azquotes.com/author/32076-Joan_Robinson

Joan Robinson: What Are the Questions? https://www.jstor.org/stable/2722966

Barkley Rosser: The Legacy of Joan Robinson https://econospeak.blogspot.com/2016/05/the-legacy-of-joan-robinson.html

Paul Samuelson: A Summing-Up https://www.jstor.org/stable/1882916

Beatrice Sherrier: ‘Having fun re-reading the Solow-Robinson correspondence… https://twitter.com/Undercoverhist/status/1012901739899576320

Robert M. Solow: The Production Function & the Theory of Capital https://academic.oup.com/restud/article/23/2/101/1538444

Robert M. Solow & Joseph E. Stiglitz: Output, Employment, & Wages in the Short Run https://www.jstor.org/stable/1879599

&, of course:

Vernor Vinge: A Fire Upon the Deep https://books.google.com/books?id=fCCWWgZ7d6UC

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Key Insights:

Brad DeLong: “I have one key insight: everyone should subscribe to Foreign Affairs and read Dan Wang’s forthcoming piece…”

Noah Smith: “There are no good models in history for what China is doing…”

Dan Wang: “There are lots of questions about industrial policy that it is very difficult to answer…”

And as always, the last key insight is: Hexapodia!

References:

Ian Cutress: TSMC: We have 50% of All EUV Installations, 60% Wafer Capacity https://www.anandtech.com/show/16042/tsmc-we-have-50-of-all-euv-installations-60-wafer-capacity

Ian Cutress: Intel’s x86 Designs No Longer Limited to Intel on Intel: IP Blocks for Foundry, Cores on TSMC <https://www.anandtech.com/show/16575/intels-x86-designs-no-longer-limited-to-intel-on-intel-ip-blocks-for-foundry-cores-on-tsmc>

Ian Cutress: US Charges Huawei for Technology Theft & Violating Sanctions, China Rebukes "Unreasonable Crackdown" https://www.anandtech.com/show/13911/us-charges-huawei-for-technology-theft-violating-sanctions-china-rebukes-unreasonable-crackdown

Henry Farrell & Abraham Newman: Weaponized Globalization: Huawei & the Emerging Battle over 5G Networks

Henry Farrell & Abraham Newman: Weaponized Interdependence: How Global Economic Networks Shape Coercion & Surveillance https://www.dropbox.com/s/cbv95thldv2dzro/%20Post%20Proofreading%20Weaponized%20Interdependence_IS_Submission.docx?dl=0

Andrei Frumusanu: Intel 3rd Gen Xeon Scalable (Ice Lake SP) Review: Generationally Big, Competitively Small https://www.anandtech.com/show/16594/intel-3rd-gen-xeon-scalable-review

Andrei Frumusanu: Apple Announces The Apple Silicon M1: Ditching x86 - What to Expect, Based on A14 https://www.anandtech.com/show/16226/apple-silicon-m1-a14-deep-dive

Andrei Frumusanu: The 2020 Mac Mini Unleashed: Putting Apple Silicon M1 to the Test https://www.anandtech.com/show/16252/mac-mini-apple-m1-tested

Andrei Frumusanu: TSMC Confirms Halt to Huawei Shipments In September https://www.anandtech.com/show/15915/tsmc-confirms-halt-to-huawei-shipments-in-september

Barry Naughton: Growing Out of the Plan: Chinese Economic Reform, 1978-1993 https://books.google.com/books?id=LzzgQP0BX34C

Barry Naughton: The Rise of China's Industrial Policy, 1978 To 2020 https://books.google.com/books?id=1xdezgEACAAJ

Yingyi Qian: How Reform Worked in China: The Transition from Plan to Market https://books.google.com/books?id=eKZADwAAQBAJ

Anton Shilov: ASML Ramps Up EUV Scanners Production: 35 in 2020, Up to 50 in 2021 https://www.anandtech.com/show/15428/asml-ramps-up-euv-scanners-production-35-in-2020-45-50-in-2021

Dan Wang: 2020 Letter https://danwang.co/2020-letter

&, of course:

Vernor Vinge: A Fire Upon the Deep https://books.google.com/books?id=fCCWWgZ7d6UC

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…have to come from the arc of Asia facing the bullets, because the American century is over… It's possible to be increasingly optimistic about climate change and to recognize that we still have a huge way to go… If you want to see a coral reef other than with your VR goggles, start scuba diving now…

Zeke Hausfather: Climate scientist working on temp records, climate and energy system models. Director of Climate and Energy at The Breakthrough Institute https://thebreakthrough.org/people/zeke-hausfather

Global Warming:

We are now at 1.2℃—2.15℉ above preindustrial, with temperature rising at 0.2℃—0.36℉ every decade, with a lot of momentum behind that rise…

Key Insights:

Brad DeLong: ‘Fifteen years ago solar power was going to be burning switchgrass in a closed carbon cycle…. We thought that Nikola Tesla had won the battle of the systems against Thomas Edison because battery technology is poisonous, corrosive, and incredibly difficult—as opposed to Tesla winning the battle of the system, simply because he was an absolute amazing genius who could make electrons get up and dance in high-power alternating current in ways that should not have been possible. Now we know better…’

Zeke Hausfather: ‘Technology is the sauce: 15 years ago we were talking as if it was this giant trade-off between the economy and and the environment… hat was baked into these climate economics… the entire assumption…. In 2009 solar was $350 a megawatt-hour…. The price of solar has fallen 10 fold. The price of wind has fallen threefold, the price of batteries has fallen tenfold. Do not underestimate the extent to which technology enables…. It's possible to be increasingly optimistic about climate change and to recognize that we still have a huge way to go… even if we have started taking the worst possible outcomes off the table…. We shouldn't give up hope…’

Brad DeLong: ‘The American century is over. The United States has broken so many promises over the past four years. No fraction of the Republican party will commit to being “globalist” ever again. Global political leadership will have to come from the arc of Asia from China through to Pakistan—the six great river valleys of Asia plus the monsoon regions with all their subsistence farmers who are in the frontline and will be taking the bullets of damage from global warming as they need the right amount of water at the right time to live, The minds of these Asian governments will be concentrated over the next 60 years. And when they say “bark “,I think the rest of the world will have no choice but to go “ARF!”

Noah Smith: ‘Everything's downstream from technology. Technology determines the possibilities of politics, the trade-off functions of economics—all the entire terms of debate. And that technology does not fall from the sky. We live not in Ed Prescott world but Paul Romer world, where technology is something that we choose to make. We do not think enough about purposeful making of technologies that changes the game and our constraints…’

Brad DeLong: ‘If you want to see a coral reef other than with your VR goggles, start scuba diving now…’

All: ‘HEXAPODIA!…’

On the Front Lines & Likely to Take the Bullets:

The 2 billion of the global poor who currently live in the six great river valleys plus the monsoon lands of Asia are (a) among those most at risk from global warming, and (b) the object of concern from states—China and India—highly likely to be global superpowers and thus in positions to act come mid-century.

Drone strikes on the coal-fired power plants of countries that do not play ball with China and India? They have every incentive to try to keep the monsoons in the right place at the right time with the right amount of water—plus trying to keep enough but not too much and not too irregular water flows through the Indus, Ganges, Brahmaputra, Mekong, Yangtze, and Yellow Rivers:

References:

Kevin Cowtan & al.: Robust Comparison of Climate Models with Observations Using Blended Land-Air & Ocean Sea-Surface Temperatures: ‘Estimates of recent surface temperature evolution fall at the lower end of climate model projections… a systematic bias in model‐observation comparisons arising from differential warming rates between sea-surface temperatures and surface-air temperatures…. A further bias arises from the treatment of temperatures in regions where the sea ice boundary has changed… 38% of the discrepancy in trend… LINK: https://agupubs.onlinelibrary.wiley.com/doi/full/10.1002/2015GL064888

Lijing Cheng & al.: How Fast Are the Oceans Warming?: ’About 93% of the energy imbalance accumulates in the ocean as increased ocean heat content…. Models reliably project changes in OHC… LINK: https://science.sciencemag.org/content/363/6423/128.summary

Zeke Hausfather & Glen P. Peters: Emissions: The ‘Business as Ssual’ Story Is Misleading: ‘Stop using the worst-case scenario for climate warming as the most likely outcome—more-realistic baselines make for better policy… LINK: https://www.nature.com/articles/d41586-020-00177-3?fbclid=IwAR0pNvCUzF92urBZpYgFgcmVB5n5ugvM410Oas3lDA3UWftQ6NZM7OTdOdA

S. C. Sherwood & al.: An Assessment of Earth’s Climate Sensitivity Using Multiple Lines of Evidence: ’Earth’s equilibrium climate sensitivity per doubling of atmospheric CO2, characterized by an effective sensitivity S… [via] feedback process understanding, the historical climate record, and the paleoclimate record. An S value lower than 2 K is difficult to reconcile with any…. The amount of cooling during the Last Glacial Maximum provides strong evidence against values of S greater than 4.5 K… LINK: https://agupubs.onlinelibrary.wiley.com/doi/abs/10.1029/2019RG000678

Zeke Hausfather & al: Evaluating the Performance of Past Climate Model Projections: ‘Climate models published over the past five decades were skillful in predicting subsequent GMST changes, with most models examined showing warming consistent with observations, particularly when mismatches between model‐projected and observationally estimated forcings were taken into account… LINK: https://agupubs.onlinelibrary.wiley.com/doi/full/10.1029/2019GL0853788

Noah Smith: Economists Are Out of Touch With Climate Change: ‘Researchers strive for contrarian insights. They should get the science right first… LINK: https://www.bloomberg.com/opinion/articles/2016-03-14/economists-are-out-of-touch-with-climate-change

&, of course:

Vernor Vinge: A Fire Upon the Deep https://books.google.com/books?id=fCCWWgZ7d6UC

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…as Leninist, Noah Smith as Burkean. We neoliberals and neoliberal-adjacents need to come up with five significant discrete policies to make the world economy work better to reduce not just extreme but regular poverty over the next generation, rather than rest on fictitious laurels…

Max Roser: “Most people in the world live in poverty. 85% of the world live on less than $30 per day, two-thirds live on less than $10 per day, and every tenth person lives on less than $1.90 per day. In each of these statistics price differences between countries are taken into account to adjust for the purchasing power in each country…”

References:

Robert Allen: Global Economic History: A Very Short Introduction https://books.google.com/books?id=FrDsDaWycjQC

James Ferguson: The Anti-Politics Machine: “Development”, Depolitization, & Bureaucratic Power in Lesotho https://books.google.com/books?id=hgXbebNQ918C

James Ferguson: Expectations of Modernity: Myths & Meanings of Urban Life in the Zambian Copper Belt https://books.google.com/books?id=KidSoXDsbg8C

Jason Hickel: The Divide: A Brief Guide to Global Inequality & its Solutions https://books.google.com/books?id=o1k_DQAAQBAJ

Noah Smith: Against Hickelism: Poverty Is Falling, & It Isn't Because of Free-Market Capitalism https://noahpinion.substack.com/p/against-hickelism

Karl Polanyi: The Great Transformation: The Political and Economic Origins of Our Time https://books.google.com/books?id=lje4MgAACAAJ

Max Roser & al.: Our World in Data https://ourworldindata.org

&, of course:

Vernor Vinge: A Fire Upon the Deep https://books.google.com/books?id=fCCWWgZ7d6UC

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…from the rest of coastal East Asia when looked at in comparative context:

Today Noah Smith & Brad DeLong talk about China, the Taiwan Semiconductor Manufacturing Corporation, Wilhelmine Germany before WWI, & other topics. The key insights are: (1) we need to get Dan Wang on this podcast; (2) in the context of coastal East Asia after WWII, it does not look as though China has any special economic development sauce—it’s just so huge—(3) China’s land-policy slowdown of migration to the coast has made its economic development significantly slower, (4) Barry Eichengreen with his theories of middle-income growth slowdown looks very wise, and (5) hexapodia!

Regional Income Levels in China Today:

The Coast-Interior Divergence:

China Not That Special in Coastal East-Asian Context—Except for Being Very Large Indeed:

If anything, it is distinguished by its late takeoff:

The Three Chinas:

A 50-Million Malaysia, a 300-Million Thailand, and a 1-Billion Vietnam All Mashed Together:

References:

Kathrin Hille: TSMC: How a Taiwanese Chipmaker Became a Linchpin of the Global Economy https://www.ft.com/content/05206915-fd73-4a3a-92a5-6760ce965bd9

Barry Naughton: Growing Out of the Plan: Chinese Economic Reform 1978-1993 https://www.google.com/books/edition/Growing_Out_of_the_Plan/LzzgQP0BX34C

Noah Smith: China Is Very 20th Century https://noahpinion.substack.com/p/china-is-very-20th-century

Noah Smith: China Just Isn’t Very Popular https://noahpinion.substack.com/p/china-just-isnt-very-popular

Noah Smith: Invincible Empire?: ‘Can China’s Neighbors Resist Its Overwhelming Power? https://noahpinion.substack.com/p/invincible-empire

Joe Studwell: How Asia Works: Success & Failure in the World’s Most Dynamic Region https://www.google.com/books/edition/How_Asia_Works/dNs33Q1cAX0C

TSMC: TSMC https://www.tsmc.com/english

&:

Vernor Vinge: A Fire Upon the Deep https://books.google.com/books?id=fCCWWgZ7d6UC

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In the last resort, the the way the government budget constraint balances itself is through the fiscal theory of the price level: levying this inflation tax on holders of money balances, redistributing wealth away from those who have nominal assets to nominal debts, and imposing a large cognitive-load tax on doing your economic calculation arithmetic. That makes this a lousy tax to impose. Larry and Olivier think we are heading down the road toward a world in which, because Republicans will not allow taxes to be raised, this lousy inflation tax will be levied unless Democrats gird their loins and prepare for an eventuality in which they sober-eyed recognize the costs to real people of letting the government budget constraint balance itself via the inflation tax…

Background:

References

Olivier Blanchard: In Defense of Concerns Over the $1.9 Trillion Relief Plan https://www.piie.com/blogs/realtime-economic-issues-watch/defense-concerns-over-19-trillion-relief-plan

Wendy Edelberg & Louise Sheiner: The Macroeconomic Implications of Biden’s $1.9 Trillion Fiscal Package https://www.brookings.edu/blog/up-front/2021/01/28/the-macroeconomic-implications-of-bidens-1-9-trillion-fiscal-package/

Neil Irwin: Move Over, Nerds. It’s the Politicians’ Economy Now https://www.nytimes.com/2021/03/09/upshot/politicians-not-central-bankers-economy-policy.html

Lawrence H. Summers & Paul Krugman: A Conversation with Lawrence H. Summers & Paul Krugman https://www.youtube.com/watch?v=EbZ3_LZxs54

Claudia Sahm: A Big Fiscal Push Is Urgent, The Risk of Overheating Is Small https://www.ineteconomics.org/perspectives/blog/a-big-fiscal-push-is-urgent-the-risk-of-overheating-is-small

Larry Summers: The Biden Stimulus Is Admirably Ambitious. But It Brings Some Big Risks, too https://www.washingtonpost.com/opinions/2021/02/04/larry-summers-biden-covid-stimulus/

&:

Vernor Vinge: A Fire Upon the Deep https://books.google.com/books?id=fCCWWgZ7d6UC

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For 200 years—from 1800 to 2000—first the Industrial Revolution Age and next the Modern Economic Growth Age rolled forward, bringing previously unimaginable wealth to the global north. And the global south fell further and further behind. Don’t get us wrong—life expectancy, nutrition standards, and material well-being in 2000 were all much higher in the global south in 2000 than in 1800. But the proportional gap vis-a-vis the global north had grown to staggering and awful proportions that were a scandal, a disgrace, and a crime. But since 2000 the worm may have turned: now it looks as though the global south—virtually the entire global south—is now “converging” and catching up to the global north.

References:

William Baumol (1986): Productivity, Convergence, & Welfare: What the Long-Run Data Show http://piketty.pse.ens.fr/files/Baumol1986.pdf

J. Bradford DeLong (1988): Productivity, Convergence, & Welfare: Comment https://www.jstor.org/stable/1807174

Paul Krugman (1991): _ Increasing Returns and Economic Geography_ https://pr.princeton.edu/pictures/g-k/krugman/krugman-increasing_returns_1991.pdf

Lant Pritchett (1997): Divergence, Big Time https://www.econ.nyu.edu/user/debraj/Courses/Readings/Pritchett.pdf?seq=14

Masahisa Fujita, Paul Krugman, & Anthony J. Venables (1999): The Spatial Economy: Cities, Regions, & International Tradehttps://mitpress.mit.edu/books/spatial-economy

Alberto Alesina, William Easterly, & Janina Matuszeski (2009): Artificial States https://wcfia.harvard.edu/files/wcfia/files/alesina_artificialstates.pdf

Joe Studwell (2013): How Asia Works: Success and Failure In the World's Most Dynamic Regionhttps://books.google.com/books?id=dNs33Q1cAX0C

Noah Smith (2021): _All Futurism is Afrofuturism https://noahpinion.substack.com/p/all-futurism-is-afrofuturism

Dev Patel, Justin Sandefur, & Arvind Subramanian (2021): The New Era of Unconditional Convergence https://www.cgdev.org/sites/default/files/new-era-unconditional-convergence.pdf

Michael Kremer, Jack Willis, & Yang You (2021): Converging to Convergence https://scholar.harvard.edu/yangyou/publications/converging-convergence

Noah Smith: Checking in on the Global South: ‘Developing countries are catching up, but not evenly… LINK: https://noahpinion.substack.com/p/checking-in-on-the-global-south

Twirlip of the Mists: Hexapodia as the Key Insighthttp://web.hexapodia.org/

Vernor Vinge: A Fire Upon the Deep https://www.amazon.com/Fire-Upon-Deep-Zones-Thought-ebook/dp/B000FBJAGO

Vernor Vinge: A Deepness in the Sky https://www.amazon.com/gp/product/B002H8ORKM

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Mike Konczal: Freedom From the Market: America’s FIght to Liberate Itself from the Grip of the Invisible Hand https://books.google.com/books?id=0aDLDwAAQBAJ

Konczal says that it is only today that “glib libertarians” purveying “fantasies” are trying to make us forget “that free programs and keeping things free from the market are as American as apple pie…” One of the best passages in the book is where he notes the connection between the Fight for $15 minimum wage campaign and human freedom: “Service sector workers demanding a $15 minimum wage and a union… have already won huge victories [with] ideas about how low-wage, precarious work is a form of unfreedom…. The Rev. William Barber noted that ‘it took 400 years from slavery to now to get from zero to $7.25 [an hour]. We can’t wait another 400 years’ to get to $15… Ultimately, if all you can say in response to the ills of society is “the market giveth, the market taketh away, blessed be the name of the market…” you have very little to say indeed. Konczal quotes Oliver Wendell Holmes’s fear and alarm that his fellow justices on the Lochner Supreme Court were, in their “willingness to use a very specific understanding of economics to override law, writ[ing] a preferential understanding of economics into the constitution itself…” in a fundamentally illegitimate and societally-disruptive way. But a better maxim is: “The market was made for man, not man for the market”.

Enthusiastically Reading: Mike Konczal: Freedom From the Market

https://www.icloud.com/pages/0qngUKWzJT3-FHnxHh2HH_M8w https://github.com/braddelong/public-files/blob/master/delongtoday-konczal-freedom-from-the-market-2021-02-18.pdf

https://drive.google.com/file/d/1ih_qxIByRCpwlu76BTjTOF_jP9XI5haw/view?usp=sharing

DeLongTODAY 4182 words 35:11 2021-02-19 :

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The classical British social insurance state took large chunks of human activity out of the marketplace and attempted to distribute them to each according to his or her need. The classical American social insurance state was targeted and grouchy, attempting to elicit proper behavior. Now we have a turn that we regard as very hopeful: recognizing that the problem of the poor is primarily the problem of too-little social power, that money brings social power, hence the solution is to get the money to the people...

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References:

Twirlip of the Mists: Hexapodia as the Key Insight http://web.hexapodia.org/

Vernor Vinge: A Fire Upon the Deep https://www.amazon.com/Fire-Upon-Deep-Zones-Thought-ebook/dp/B000FBJAGO

Beth Ann Bovino, Satyam Panday, & Shuyang Wu: Within Reach: How Stimulus Proposals Lift U.S. GDP to Pre-Pandemic Levels https://www.spglobal.com/ratings/en/research/articles/210201-economic-research-within-reach-how-stimulus-proposals-lift-u-s-gdp-to-pre-pandemic-levels-11818252

Laura Davison: Here Are the Major Parts of $1.9 Trillion Biden Relief Plan https://news.bloombergtax.com/daily-tax-report/here-are-the-major-pieces-of-bidens-1-9-trillion-stimulus-plan

Wendy Edelberg & Louise Sheiner: The Macroeconomic Implications of Biden’s $1.9 Trillion Fiscal Package

Robert A. Heinlein: Beyond This Horizon https://books.google.com/books?id=pnd0CwAAQBAJ

Erica York, Garrett Watson, & Huaqun Li: American Rescue Plan: $1.9T Biden Stimulus Package https://taxfoundation.org/biden-stimulus-american-rescue-plan/

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If moderate raises in the minimum wage do not cause unemployment, who can object to them—but why do they not cause higher unemployment, if they in fact do not?

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Reference:

Arin Dube (2019): Impacts of Minimum Wages: Review of the International Evidence https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/844350/impacts_of_minimum_wages_review_of_the_international_evidence_Arindrajit_Dube_web.pdf:

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Is there a mysterious Factor X that can speed growth, enhance opportunity, raise wages, & convince others that no, China does not have a superior system?

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Works Referenced:

Twirlip of the Mists: Hexapodia as the Key Insight: ‘I haven't had a chance to see the famous video from Straumli Realm, except as an evocation. (My only gateway onto the Net is very expensive.) Is it true that humans have six legs? I wasn't sure from the evocation. If these humans have three pairs of legs, then I think there is an easy explanation…http://web.hexapodia.org/

Vernor Vinge: A Fire Upon the Deep: ‘Blueshell: “All right, one quest. But never another!”… https://www.amazon.com/Fire-Upon-Deep-Zones-Thought-ebook/dp/B000FBJAGO

Noah Smith: Don’t Give Up on Bringing Manufacturing Back to the U.S.: ‘Offering Americans a concrete vision of what their economy could look like… may be able to gather broad support for a cohesive growth strategy, even if it isn’t a perfect one. The U.S. economic strategy of leaving industrial policy to the whims of the market has hit the point of severely diminishing returns… https://www.bloomberg.com/opinion/articles/2020-06-12/don-t-give-up-on-bringing-manufacturing-back-to-the-u-s?sref=R8NfLgwS

Joe Studwell: How Asia Works: Success and Failure In the World's Most Dynamic Region: ‘What created the Canons, the Samsungs, the Acers… was the marriage of infant industry protection and market forces, involving (initially) subsidised exports and competition between manufacturers that vied for state support… https://books.google.com/books?id=dNs33Q1cAX0C

Michael Porter & al.: Can Japan Compete?: ’If Japanese government policies and practices accounted for the nation's extraordinary competitiveness, then why wasn't Japan competitive in many of the industries where those policies had been prominently implemented?…

Albert Hirschman: The Strategy of Economic Development: ‘The strategic nature of development should lead to the coordination of economic and political forces and decision makers in a consensual path… fostering a common vision or a project of society that an expert might help make visible and publicly debated… https://books.google.com/books?id=foREAAAAYAAJ

Henry Farrell: In Praise of Negativity: ‘Mercier and Sperber’s basic argument is… that reasoning,,,has evolved as a social capacity—as a means to justify ourselves to others…. We need negative criticisms from others, since they lead us to understand weaknesses in our arguments that we are incapable of coming at ourselves… https://crookedtimber.org/2020/07/24/in-praise-of-negativity/

Chalmers Johnson: MITI & the Japanese Miracle: The Growth of Industrial Policy 1925-1975: ‘I wanted to call attention to the differences… between the capitalist economies of the United States and Britain… and Japan and its emulators… https://books.google.com/books?id=bbGlwsjW-ekC

Henry Farrell & Abraham Newman: Weaponized Interdependence: How Global Economic Networks Shape State Coercion: ‘The ability of a state to weaponize interdependence is dependent upon its institutions, the size of its economy, and how much autonomy the state has from that interconnectedness (whether or not it has asymmetrical interdependence)… https://www.dropbox.com/s/cbv95thldv2dzro/%20Post%20Proofreading%20Weaponized%20Interdependence_IS_Submission.docx?dl=0

Stephen Cohen & J. Bradford DeLong: Concrete Economics: The Hamilton Approach to Economic Growth: ‘Since Hamilton America’s successful economic policy has been pragmatic, not ideological; concrete, not abstract… https://books.google.com/books?id=BXoyBgAAQBAJ

Charles Schultze: Industrial Policy: A Dissent: ‘America is not de-industrializing. Japan does rlot owe its industrial success to its industrial policy. Government is not atble to devise a "winning" industrial structure. Finally, it is not possible in the American political system to pick and choose among individual firms and regions in the substantive, efficiency-driven way envisaged by advocates of industrial policy… https://www.brookings.edu/wp-content/uploads/2016/06/industrial_policy_schultze.pdf

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Noah Smith & Brad DeLong now have a podcast:

Works Referenced:

Twirlip of the Mists: Hexapodia as the Key Insighthttp://web.hexapodia.org/

Vernor Vinge: A Fire Upon the Deep https://www.amazon.com/Fire-Upon-Deep-Zones-Thought-ebook/dp/B000FBJAGO

Vernor Vinge: A Deepness in the Skyhttps://www.amazon.com/gp/product/B002H8ORKM

Larry Summers: The Biden Stimulus Is Admirably Ambitious. But It Brings Some Big Risks toohttps://www.washingtonpost.com/opinions/2021/02/04/larry-summers-biden-covid-stimulus/

Olivier Blanchard: ‘Let me double down and go through some numbers…

Paul Krugman: Nonstimulus Arithmetic: Why the American Rescue Plan has to be big <https://paulkrugman.substack.com/p/nonstimulus-arithmetic>

Noah Smith: COVID Relief Isn't Stimulus, It's Social Insurance: It’s not about priming the pump; it's about making people wholehttps://noahpinion.substack.com/p/covid-relief-isnt-stimulus-its-social

Wendy Edelberg & Louise Sheiner: Macroeconomic Implications of Biden’s $1.9 Trillion Fiscal Package https://www.brookings.edu/blog/up-front/2021/01/28/the-macroeconomic-implications-of-bidens-1-9-trillion-fiscal-package/

Brad DeLong: DeLongToday: Nudging Ourselves Back to Full Employmenthttps://www.delongtoday.com https://braddelong.substack.com/p/delongtoday-nudging-ourselves-toward

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