Avsnitt
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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:
* Acemoglu, Daron, & Simon Johnson. 2023. Power and Progress: Our Thousand-Year Struggle Over Technology and Prosperity. New York; Hachette Book Group.
* Acemoglu, Daron, & James A. Robinson. 2012. Why Nations Fail: The Origins of Power, Prosperity, and Poverty. New York: Crown Publishers.
* Besi. 2023. “Join us Tues. Oct. 10 at 4pm Pacific for a talk by
@MITSloan’s Simon Johnson…” Twitter. October 9. .
* 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: .
* Johnson, Simon, & James Kwak. 2011. 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown. New York: Vintage Books. .
* Smith, Noah. 2024. “Book Review: Power & Progress”. Noahpinion. February 21.
* Walton, Jo. 1998. “The Lurkers Support Me in Email”. May 16. .
+, of course:
* Vinge, Vernor. 1992. A Fire Upon the Deep. New York: TOR. .
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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:
* Burn-Murdoch, John. 2023. “Should we believe Americans when they say the economy is bad?” Financial Times, December 1 .
* Cummings, Ryan, & Neale Mahoney. 2023. “Asymmetric amplification and the consumer sentiment gap”. Briefing Book, November 13. .
* El-Erian, Mohamed. 2024. “A warning shot over the last mile in the inflation battle’. Financial Times, January 15. .
* Faroohar, Rana. 2024. “Is Bidenomics dead on arrival? The time is ripe for the administration to rethink its messaging”. Financial Times, December 18. .
* Fedor, Lauren, & Colby Smith. 2023, “Will US voters believe they are better off with Biden? Under pressure after a string of damning polls, the US president is resting his hopes for re-election on his personal economic blueprint”. Financial Times, November 6. .
* Financial Times Editorial Board. 2024. “Why Biden gets little credit for a strong US economy: The president’s team needs to show more energy in addressing voters’ concerns”. Financial Times, January 11. .
* Ghosh, Bobby. 2022. “Biden’s a Better Economic Manager Than You Think:
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.
* Greenberg, Stanley. 2024. “The Political Perils of Democrats’ Rose-Colored Glasses: Paul Krugman’s (and many Democrats’) beliefs about the economy and crime miss the reality that Americans still experience”. American Prospect, February 5. .
* Hsu, Joanne. 2024. “Surveys of Consumers: Final Results for January 2024”. February 2. .
* Krugman, Paul. 2024. “Is the Vibecession Finally Coming to an End?” New York Times, January 22. .
* Lowenkron, Hadriana. 2023. “Biden’s Approval Rating Hits New Low on Economic Worries, Poll Shows”. Bloomberg, December 18. ,
* Millard, Blake. 2024. “Consumer confidence highest in 2 years, still below pre-pandemic levels”. Sandbox Daily, February 6. .
* Omeokwe, Amara, & Chip Cutter. 2024. “Job Gains Picked Up in December, Capping Year of Healthy Hiring”. Wall Street Journal, January 5. .
* Rubin, Gabriel. 2024. “What Recession? Growth Ended Up Accelerating in 2023”. Wall Street Journal, January 25. .
* Scanlon, Kyla. 2022. “The Vibecession: The Self-Fulfilling Prophecy”. Kyla’s Newsletter, June 30. .
* Sen, Conor. 2023. “Unhappy American Consumers Will Welcome a Slower Economy”. Bloomberg, November 29.
* Scanlon, Kyla. 2023. “It’s More than Just Vibes”. Kyla’s Newsletter, December 7. .
* Torry, Harriet, & Anthony DeBarros. 2023. “Economists in WSJ Survey Still See Recession This Year Despite Easing Inflation”. Wall Street Journal, January 15. .
* Winkler, Matthew A. 2023. “The Truth About the Biden Economy: As the president launches his reelection campaign, his biggest challenge may be getting voters to ignore perception and focus on reality”. Bloomberg, April 25. .
* Wingrove, Josh. 2024. “Biden Refines Economic Pitch for 2024 in Bet Worst Is Behind Him”. Bloomberg, January 13. .
+, of course:
* Vinge, Vernor. 1992. A Fire Upon the Deep. New York: TOR. .
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Saknas det avsnitt?
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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:
* Bongaarts, John. 2020. "Trends in fertility and fertility preferences in sub-Saharan Africa: the roles of education and family planning programs." Genus 76: 32.
* Kremer, Michael, Jack Willis, & Yang You. 2021. "Converging to Convergence." National Bureau of Economic Research, Working Paper 29484, November 2021.
* Oks, David, & Henry Williams. 2022. "The Long, Slow Death of Global Development." American Affairs 6:4 (November). .
* Patel, Dev, Justin Sandefur, & Arvind Subramanian. 2021. "The new era of unconditional convergence." Journal of Development Economics 152. .
* Perkins, Dwight. 2021. "Understanding political influences on Southeast Asia's development experience." Fulbright Review of Economics and Policy 1, no. 1: 4-20. .
* Rodrik, Dani, & Joseph E. Stiglitz. 2024. "A New Growth Strategy for Developing Nations." .
* World Bank. 2023. "South Asia Development Update October 2023: Economic Outlook." .
+, of course:
* Vinge, Vernor. 1992. A Fire Upon the Deep. New York: TOR. .
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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:
* Fourastié, Jean. 1979. Les Trente Glorieuses, ou la révolution invisible de 1946 à 1975. Paris: Fayard. .
* Subramanian, Arvind, Martin Kessler, & Emanuele Properzi. 2023. "Trade Hyperglobalization is Dead. Long Live...?" Peterson Institute for International Economics Working Paper, No. 23-11. .
* Stross, Charles. 2005. Accelerando. New York: Ace Books.
* Vollrath, Dietrich. 2020. Fully Grown: Why a Stagnant Economy Is a Sign of Success. Chicago: University of Chicago Press. .
+, of course:
* Vinge, Vernor. 1992. A Fire Upon the Deep. New York: TOR. .
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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
* 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
* Plutarch: Life of Tiberius Gracchus
+, of course:
* Vernor Vinge: A Fire Upon the Deep
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:
* Vernor Vinge: A Fire Upon the Deep
Get full access to Brad DeLong's Grasping Reality at braddelong.substack.com/subscribe -
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 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:
* Brad DeLong: DRAFT: What Is Going on wiþ China’s Economy?:
* Daniel W. Drezner: The End of the Rise of China?
* Daniel W. Drezner: The Rising Dangers of a Falling China
* Daniel W. Drezner: Can U.S. Domestic Politics Cope With a Falling China?
* Arpit Gupta: What's Going on with China's Stagnation?
* János Kornai, Eric Maskin, & Gérard Roland: Understanding the Soft Budget Constraint
* Adam S. Posen: The End of China’s Economic Miracle
* Kenneth Rogoff: The Debt Supercycle Comes to China
* Noah Smith: Real estate is China's economic Achilles heel
* Noah Smith: Why is China smashing its tech industry?
* Adam Tooze: Whither China? Part I - Authoritarian impasse?
* Adam Tooze: Whither China? Part II - Posen v. Pettis or "authoritarian impasse" v. "structural dead-end”
* Adam Tooze: Whither China? Part III: Policy hubris and the end of infallibility
* Lingling Wei & Stella Yifan Xie: China’s 40-Year Boom Is Over. What Comes Next?
+, of course:
* Vernor Vinge: A Fire Upon the Deep
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Key Insights:
* 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 …
* 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…
+, of course:
* Vernor Vinge: A Fire Upon the Deep
Get full access to Brad DeLong's Grasping Reality at braddelong.substack.com/subscribe -
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.
* Noah's theory springing out of Rick Perlstein's take on the 1970s—that we are replaying it:
* Even in the 1970s, it was not inflation but “social upheaval”
* Half “Blacks and women are forgetting their place”
* Half “things are very insecure and unsafe”.
* The 1970s saw right-wing revolts
* The 1970s saw left-wing disillusionment
* And then along came inflation!
* Is this cycle repeating itself?
* Our guess is that “vibecession” has peaked—but we worry that Kyla Scanlon may be right in thinking it has deeper roots. This is a much more unequal society for white guys than we had in the 1970s.
* Brad DeLong trusts center-left economists, and they say: (4), (5), (6), and (7).
* Noah Smith summarizes: Normie Libs keep winning…
* Noah Smith summarizes: Normie Libs keep winning because they mark their beliefs to market and trust empirical data…
* Hexapodia!
References:
* Barry Eichengreen: The US Economy Is Up, so Why Is Biden Down? : ‘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 : ‘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 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 , 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 : ‘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...
+, of course:
* Vernor Vinge: A Fire Upon the Deep
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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
* Daron Acemoglu & Pascual Restrepo: “The Race Between Machine & Man: Implications of Technology for Growth, Factor Shares & Employment”
* Daisuke Adachi, Daiji Kawaguchi, & Yukiko Saito: Robots and Employment: Evidence from Japan, 1978-2017
* 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
* Lawrence Mishel and Josh Bivens: The zombie robot argument lurches on: There is no evidence that automation leads to joblessness or inequality
* Arjun Ramani & Zhengdong Wang: “Why transformative artificial intelligence is really, really hard to achieve”
* Noah Smith: American workers need lots and lots of robots: With the power of automation, our workers can win. Without it, they're in trouble
* Melline Somers, Angelos Theodorakopoulos, & Kerstin Hötte: The fear of technology-driven unemployment and its empirical base
* Melline Somers, Angelos Theodorakopoulos, & Kerstin Hötte: Technology and jobs: A systematic literature review
+, of course:
* Vernor Vinge: A Fire Upon the Deep
Get full access to Brad DeLong's Grasping Reality at braddelong.substack.com/subscribe -
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
+, of course:
* Vernor Vinge: A Fire Upon the Deep
Get full access to Brad DeLong's Grasping Reality at braddelong.substack.com/subscribe -
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…
+, of course:
* Vernor Vinge: A Fire Upon the Deep
Get full access to Brad DeLong's Grasping Reality at braddelong.substack.com/subscribe -
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:
* Robert Barsky, Christopher House, & Miles Kimball: Sticky-Price Models and Durable Goods
* Daron Acemoglu & James Robinson: The Narrow Corridor
* Mancur Olson: The Rise & Decline of Nations
* Thomas Hobbes: Leviathan
* John Locke: Second Treatise of Government
* Edward Bellamy: Looking Backward
* Robin Hanson: The Age of Em
* Ruchir Agarwal & Miles Kimball: The Future of Inflation”: in Finance & Development ; IMF Podcasts
* Miles Kimball: Bibliographic Post on Negative Interest Rate Policy: "How and Why to Eliminate the Zero Lower Bound: A Reader’s Guide”
* Miles Kimball: How a Toolkit Lacking a Full Strength Negative Interest Rate Option Led to the Current Inflationary Surge ;
* Miles Kimball: How Having Negative Interest Rate Policy in Its Toolkit Would Make the Fed Braver in Confronting Inflation with Needed Rate Hikes—A Tweetstorm”
* Miles Kimball: Brad DeLong Confirms that Not Having Negative Interest Rate Policy in the Monetary Policy Toolkit Makes People Afraid of Vigorous Rate Hikes to Control Inflation” ;
* Miles Kimball: Serious silliness:
* Miles Kimball: On the Fed’s 3/4% hikes:
* Miles Kimball: ”Next Generation Monetary Policy”
* Miles Kimball: Tweetstorm of Favorite Passages from Noah Smith's Review of Brad DeLong's book Slouching Towards Utopia
* Miles Kimball: On the Age of Em
* Miles Kimball: On Consciousness
* Miles Kimball: The Decline of Drudgery and the Paradox of Hard Work
* Miles Kimball: The Potential of a National Well-Being Index
* Miles Kimball: My Experiences with Gary Becker
* Miles Kimball: Benjamin Franklin's Strategy to Make the US a Superpower Worked Once, Why Not Try It Again?
* Miles Kimball: Life Coaching
* Miles Kimball: Odious Wealth
* Miles Kimball: Oren Cass on the Value of Work
* Miles Kimball: Janet Yellen is Hardly a Dove—She Knows the US Economy Needs Some Unemployment
* Miles Kimball: How and Why to Expand the Nonprofit Sector: A Reader’s Guide
* Miles Kimball: On John Locke's Second Treatise
+, of course:
* Vernor Vinge: A Fire Upon the Deep
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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…
+, of course:
* Vernor Vinge: A Fire Upon the Deep
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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?…
+, of course:
* Vernor Vinge: A Fire Upon the Deep
Get full access to Brad DeLong's Grasping Reality at braddelong.substack.com/subscribe -
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…
+, of course:
* Vernor Vinge: A Fire Upon the Deep
Get full access to Brad DeLong's Grasping Reality at braddelong.substack.com/subscribe -
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!!
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References:
* J. Bradford DeLong: Slouching Towards Utopia: An Economic History of the 20th Century
* Robert Gordon: The Rise and Fall of American Growth
* Gary Gerstle: The Rise and Fall of the Neoliberal Order: America and the World in the Free Market Era
* Vaclav Smil: Creating the 20th Century: Technical Innovations of 1867-1914 and Their Lasting Impact
* Vaclav Smil: Transforming the 20th Century: Technical Innovations and Their Consequences
* Friedrich von Hayek: The Road to Serfdom
* Karl Polanyi: The Great Transfomation: The Political and Economic Origins of Our Time
* John Maynard Keynes: The General Theory of Employment, Interest and Money
+, of course:
* Vernor Vinge: A Fire Upon the Deep
Get full access to Brad DeLong's Grasping Reality at braddelong.substack.com/subscribe -
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
Get full access to Brad DeLong's Grasping Reality at braddelong.substack.com/subscribe -
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
* Leah Platt Boustan: Competition in the Promised Land: Black Migrants in Northern Cities and Labor Markets
+, of course:
* Vernor Vinge: A Fire Upon the Deep
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
* Stephen S. Cohen & J. Bradford DeLong (2016): Concrete Economics: The Hamiltonian Approach to Economic Policy (Cambridge: HBS Press, 978-1422189818)
* J. Bradford DeLong (2022): Slouching Towards Utopia: An Economic History of the 20th Century (New York: Basic Books, 978-0465019595)
* Chalmers Johnson (1982): MITI and the Japanese Miracle: The Growth of Industrial Policy, 1925-1975 (Stanford: Stanford University Press, 978-0804712064)
* W. David Marx (): Ametora: How Japan Saved American Style
+, of course:
* Vernor Vinge: A Fire Upon the Deep
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