John Q

Another open thread, where you can comment on any topic. Moderation and standard rules still apply. Lengthy side discussions on other posts will be diverted here. Enjoy!

Writing in Reason magazine, Jacob Sullum laments that “Marjorie Taylor Greene Presents Republicans With a Sadly Familiar Choice Between Blind Loyalty to Trump and a Basic Respect for Reality”.

That’s true. But the choice between in-group loyalty and basic respect for reality was a core problem for the right when Trump was still a Democrat, and propertarians/libertarians/classical liberals were among the most prominent enemies of reality. For decades, they advanced a conspiracy theory in which all the governments in the world, backed up by every major scientific institution, were advancing a fraudulent theory of global warming.

Here’s a pretty typical example from Pat Michaels, then the lead climate authority at Cato, being interviewed on Fox

LEVIN: Let me stop you there. Who does these computer models?

MICHAELS: Governments. There are 32 families of computer models that are used by the United Nations, each government sponsored. And all of them are predicting far, far too much warming.

… it’s not the science that’s determining how much it’s going to warm. A lot of people don’t know this, but it happens to be true, and you know, we could speculate as to why that paper was published right before the 2016 election? I wouldn’t want to impute causation, but gee, if …

… When you buy off the academy, you can get what you paid for …So now, the academy roots for anything that is big government that it feels it can tie onto to maintain this relationship. The roots of political correctness, there are many, manifold and varied. But one of them certainly was the enslavement of the academy.

This seems to me to be more, rather than less, crazy than Trump’s “stop the steal” or even QAnon. At least in these theories, the conspirators are trying to achieving something big – establishing a socialist dictatorship or making the world safe for cannibal lizardoids. By contrast, Michaels wants an equally expansive conspiracy with tens of thousand of particpants (including lots of rightwing governments), whose object is – the establishment of an emissions trading scheme?

Before denouncing QAnon, libertarians ought to take some responsibility for their own leading role in the campaign against reality.

It’s been hard to miss the chaos that’s arisen from a bunch of Reddit users (on sub-reddit WallStreetBets) getting together to squeeze shortsellers on stocks including GameStop and AMC Theatres. Most of the attention has been confined to the stockmarket action, but I was struck by this piece in The Bulwark[1], making the point that the process has enabled AMC to issue high-priced shares, repay debt and thereby stave off impending bankruptcy.

I don’t have a view on whether AMC should go bankrupt or not, but this is the kind of decision about capital allocation that is driven, in large measure by stockmarkets. The efficient markets hypothesis says that stockmarkets do the best possible job of estimating the value of assets, and thereby guides the allocation of capital. In the absence of the WallStreetBets push, it appeared that the market judgement was that it would be better to steer capital away from AMC, and into some other activity. Now, it’s the opposite.

One possible response is that WallStreetBets is an episode of craziness that will soon pass. But once you strip away newsworthy bits like the role of Reddit and the scale of the price movement, this kind of squeeze (or conversely, short-selling raid) is available, and potentially profitable, to any group of traders who can mobilize the necessary few billion (using options, those billions can be magnified a fair way). That’s part of the reason why stock prices are far more volatile than would seem justified by the arrival of new information relative to future earnings.

If stock prices are more volatile than underlying value, the two must differ most of the time. That undermines the claim that financial markets do a better job of allocating investment capital than would, for example, a central planning board. Even if you don’t want to go that far, there’s no obvious reason why limiting stock trading to (say) once a week would impair the allocation of capital to an extent that would outweigh the savings from cutting the financial down to a small fraction of its present size.

fn1. A Never-Trump website, well worth a look.

Reading about the recent military coup in Myanmar, I’ve seen the view that Biden’s criticism of the coup is undermined by the fact that the pretext for the coup, a supposedly stolen election, was exactly the same as that raised by Trump and the Republican Party in response to Biden’s 2020 election victory.

There’s a problem in this reasoning which is easy to see, but harder to resolve. It makes intuitive sense to say that the United States should not point fingers at other countries when it has the same problems itself. But it seems strange to say that, having just defeated an attempt to overturn a democratic election in his own country, Biden is in some way disqualified from criticising a similar attempt in Myanmar.

The answer to this question is to recognise that Biden does not speak for “the United States”, but for the party he leads. To the extant that his party supports democracy in the US, it is naturally aligned with supporters of democracy everywhere, and against supporters of dictatorship, both at home and abroad. Conversely, Trumpists in the United States are naturally aligned with dictators everywhere and opposed to democrats (with both small and capital “D”).

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Another open thread, where you can comment on any topic. Moderation and standard rules still apply. Lengthy side discussions on other posts will be diverted here. Enjoy!

Here’s the second of the regular open threads, where you can comment on any topic. Moderation and standard rules still apply. Lengthy side discussions on other posts will be diverted here. Enjoy!

There’s a lot of luck[1] in politics. If a handful of events had gone differently in 2016, we’d probably be discussing President Clinton’s second term right now. If the Brexit referendum had been held a few weeks earlier, Remain would probably have won, and David Cameron might still be PM. A few lucky breaks and Labor would have won the 2019 Australian election. And if things had gone slightly differently in Georgia (with the Repubs falling just short in the first round, then losing both runoffs), the prospects for a Biden Administration would be greatly worse than they are.

The first three of these events were unexpected wins for the Trumpist right. And while nobody much pays attention to Australia, the first two were interpreted by Trumpists as much more than lucky breaks. They fed a whole set of beliefs which built up to an expectation that, no matter how bad things looked, their side was destined (for a lot of Trumpists, divinely ordained) for victory.

It’s not surprising then, that Trump’s supporters expected victory in November, and were willing to believe, without any evidence that their victory had been stolen. But as it became more and more evident that the election results were not going to be overturned, cognitive dissonance started to set in. The options were to accept that, fairly or not, they had lost, or to embrace the apocalyptic vision of QAnon and the far right, manifested in the Capitol last week. From the polling evidence, it looks as if the Republican base split down the middle on this.

Now that the insurrection has failed, and Biden’s inauguration is about to take place, the choice gets even sharper. As those who rejected the election result and tried to overturn it are increasingly ostracised and increasingly forced to recant[2], there’s no middle ground between accepting defeat, at least this time around, and going all the way down the insurrectionist rabbit hole and into rightwing terrorism.

From the politics as usual viewpoint of someone like Mitch McConnell, the advisability of the first course of action is obvious. But to the extent that the energy of the Trumpists was built on faith in inevitable victory, that may be difficult to sustain[3].

As for rightwing terrorism, it’s bound to keep on happening. The history of events like the Beer Hall Putsch shows that clownish initial failure does not guarantee defeat (no inevitability, again). We have to hope that, having been directly and personally threatened by the terrorists, the Democrats won’t shrink from the responses necessary to suppress them and the Republicans won’t be willing to defend them.

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That’s the headline[1] for my latest piece in the Canberra Times. It doesn’t appear to be paywalled, but I’m including the text over the fold.

As prommised, here’s the first of the regular open threads, where you can comment on any topic. Moderation and standard rules still apply. Lengthy side discussions on other posts will be diverted here. Enjoy!

That’s the headline for a piece that ran in the Canberra Times on New Years’ Eve, looking at the way borders separate families for serious reasons (like controlling the pandemic) and for frivolous ones (for example, because of spurious claims about the effect of migration on wages, or because people are uncomfortable about a changing population).

A new regular feature on CT! Once a week, we’ll be posting an open thread, where you can post on any topic you like, subject to the usual moderation rules.

The other purpose of this regular post will be to deal with thread derailment. An example is a recent thread on Brexit which deviated into a lengthy analysis of labelling rules for marmalade and chocolate. Disputes of this kind will be directed to the open thread, where the participants can argue to their hearts’ content.

The first suggested topic for discussion: what should we call this feature? The current title is not very imaginative, so feel free to suggest something better. Is Marmalade and Chocolate too obscure?

Another extract from my book-in-progress, Economic Consequences of the Pandemic

Over the course of the Covid-19 pandemic, governments around the world have issued huge amounts of public debt, much of which has been purchased by central banks. In the US, for example, Federal public debt increased by $3 trillion over the course of 2020 (this is about 15 per cent of US national income)

while the monetary base (money created directly by the Federal Reserve) increased by around $1.6 trillion. This money was used to buy government bonds along with corporate securities in open market operations (what is now called Quantitative Easing)

These policies represent a complete repudiation of assumptions which were considered unquestionable by the political class until relatively recently: that budgets should be balanced, and that public debt is always undesirable.

Even the most widely-accepted modifications of these assumptions are now problematic. A standard view is that budget balances should be stable over the course of the economic cycle. If measured appropriately, this entails a stable ratio of public debt to national income.

But where should this ratio be set?

A Brexit deal has finally happened, so I’m reposting these thoughts, originally from 2016 , which seems like a thousand years ago, and previously edited and reposted in 2019.

Since the collapse of faith in neoliberalism following the Global Financial Crisis, the political right has been increasingly dominated by Trumpism. But in most cases, including the US, this has so far amounted to little more than Trilling’s irritable mental gestures. To the extent that there is any policy program, it is little more than crony capitalism. Of all the Trumpist groups that have achieved political power the only ones that have anything amounting to a political program are the Brexiteers.

The sustainability of Trumpism as a political force will depend, in large measure, on the perceived success or failure of Brexit. So, what will the day after Brexit look like, and more importantly, feel like? I’ll rule out the so-called “soft Brexit” where Britain stays in the EU for all practical purposes, gaining some minor concessions on immigration restrictions. It seems unlikely and would be even more of an anti-climax than the case I want to think about.

It’s easy to imagine a disaster, and maybe that will happen. But suppose everything goes relatively smoothly. That is, Britain leaves the EU and the single market, but gets deals in place that keep trade flowing smoothly, retains visa-free travel for visitors and so on.

What will the day after feel like?

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[Warning: half-formed thoughts ahead]
One of the most striking characteristics of the 21st century economy (divided into goods, human contact services and information) is that even very poor people have access to information-based services that were almost unimaginable 30 years ago. Given free wifi and a second-hand phone, someone lining up at a food bank can blog about the experience, and possibly attract readers all around the world[1]. Or they can entertain themselves with an endless supply of free books, news media, music and videos. That’s great, but it doesn’t change the fact that people in both rich and poor countries are going hungry.

Economics has traditionally been about scarcity. But now we have one part of the economy where scarcity remains dominant, and another, growing part, where it has just about disappeared. That raises a lot of different issues.

First, while we are accustomed to think of things like economic growth and inflation rates as objective facts, they are actually based on index numbers, which are the products of theoretical models. Those models don’t work well when an increasing part of the economy consists of information services that are becoming radically cheaper all the time. As a result, much of the debate about the desirability or otherwise of growth is misconceived.

A positive implication is that we can anticipate improving standards of living, because of ever-increasing access to information services, without economic growth in the 20th century sense of steadily increasing throughput of materials and energy, and correspondingly increasing environmental damage. T

A negative implication is that real incomes (that is, incomes deflated by a consumer price index) can increase, even as basic needs like food and housing become less affordable, because the price of inforamation related services is falling fast. I can’t find much that’s readily accessible on this – pointers would be appreciated. One notable fact is that the proportion of disposable income spent on food, which fell sharply between 1960 and 1998, has remained almost static since then. The price of food seems to have risen a little faster than the CPI over this period.

I haven’t talked yet about human contact services. Scarcity is just as relevant here as in the goods economy. Governments are heavily involved in funding and providing these services, and the quality of services is hard to measure. As a result, the kinds of services people get aren’t determined simply by their capacity to pay.

A question to which I don’t have an answer. Is there some way to exploit the massively increased productivity of information services to allow more, and more equal, provision of basic goods? This question underlies a lot of discussion about Universal Basic Income and similar ideas, but is rarely posed in a satisfactory way, let alone answered.

As you can tell, I’m struggling with some complicated problems here, so any thoughts welcome.

fn1. In the early days of blogging, thehomelessguy [Kevin Barbieux] did exactly this. His most recent site is here.