Archive for the ‘Economics’ Category

Biden’s “Buy American” mistake

February 15, 2021

Trumpers persist in caricaturing President Biden as some kind of mentally defective fool. One Facebook graphic even denying that such a man could have gotten 81 million legitimate votes. While in the real world, Biden demonstrates what strong, sound, intelligent, honest, competent, sane and humanly decent leadership looks like, moving briskly to tackle unprecedented challenges and repair much of his predecessor’s damage to America. 

But Bidenism is not a cult like Trumpism. I don’t support his every stance.

For one thing, far too much of the $1.9 trillion Covid relief plan is earmarked for checks to people not really needy. Maybe that’s considered the price of political support for the rest. But I’d rather see more money going to those hurting most.

President Biden also proposes expanding regulations privileging American suppliers over foreign ones. That might seem like apple pie. But it runs up against World Trade Organization rules targeting discriminatory practices (against foreign vendors), to make trade free and fair. Trump, in his “America First” folly, tried to weaken the WTO. Not understanding how promoting free and fair trade globally benefits all countries, America included. 

A “buy American” policy sounds good for U.S. jobs. But The Economist recently explained that “by locking firms out of global supply chains and shielding them from competition it promotes inefficiency, destroying more employment than it creates.” The magazine cites one estimate that we actually lose 300,000 jobs. 

How so? Simple, really. If another country can make something cheaper (or better) than we can, we’re better off buying it from them and having our own workers instead make those things wecan make better or cheaper. That’s what economist David Ricardo called “comparative advantage.” Focusing our investment on our strengths, not our weaknesses. That makes us richer. 

Yes, buying cheap Chinese goods means fewer Americans employed making those things. But the savings to U.S. consumers enables them to buy more of other things — and that creates more U.S. jobs. And the trade also makes China richer, enabling Chinese to buy more stuff we export — creating yet more American jobs. Win-win. The beauty of global free trade.

President Biden (like others before him) seems bedazzled by the dream of “bringing back U.S. manufacturing jobs.” That’s so twentieth-century. In fact we manufacture as much as ever — but we do it with a lot less labor. That’s a good thing. U.S. jobs are not being lost to foreign countries so much as to improving automation and other technological advancements. That is, rising productivity.

At one time, almost the entire workforce was needed on farms just to feed everyone. Improved agricultural productivity freed most of us up, to work in factories instead. Thus we could produce food andmanufactured goods, making us richer. Now, another wave of productivity advancement similarly liberates us from factories, so more can be employed elsewhere, like in services. So we can produce food and manufactured goods and services. Another wealth gain. 

America’s future prosperity does not lie with metal-bashing smokestack factories, but high tech and services.

None of this is the economics equivalent of rocket science. “Buy American” is tired old-line Democratic stuff that reminds me why I used to be a Republican. But tragically that Republican party, with actual principles, that actually made sense, is long gone. At least Democrats are sane and sincere, not disingenuous and deranged. 

Understanding the China problem

February 1, 2021

Henry Kissinger wrote a 624-page book, On China. Here’s a shorter take.

China’s imperial dynasty was overthrown in 1911. Violent turmoil followed as warlords, Communists, and a government led by Chiang Kai-shek all battled for power. Then Japan’s 1930s invasion ravaged the country. Finally in 1949 Mao’s Communists triumphed; Chiang and his Nationalists decamping to Taiwan. Which became prosperous and democratic; de facto independent, though China insists it’s theirs.

Poverty always afflicted China. Mao’s harebrained economic policies didn’t help. The 1958-62 “Great Leap Forward” left tens of millions dead. The country was convulsed yet again in 1966 by the madcap “Cultural Revolution” Mao launched to consolidate his control. Destroying much cultural heritage, and many more lives. Ending only with Mao’s 1976 death.

That history of traumatization shapes China’s psyche. Mere domestic order seems a great blessing. Chinese also keenly feel past humiliation, seeing a century of Western bullying and exploitation. Making them truculently nationalistic, with chips on their shoulders, something to prove, swaggeringly aggressive.

Deng Xiaoping succeeded Mao, jettisoning his craziness and most communist dogma, opening up the economy. While big state-owned enterprises endure, they accompany a private sector actually epitomizing “unfettered laissez faire capitalism.” Producing four decades of spectacular economic growth, eliminating most Chinese poverty and creating a vast middle class. For which they also thank the regime.

Younger people, especially, wanted a freer society too. But that dream died with the 1989 Tiananmen bloodbath. All memory of which the party has striven to scrub out. The basic deal it offers is rising prosperity in exchange for total political control.

Corruption and dishonesty have long characterized China’s culture. In 2012 Xi Jinping became leader, gaining plaudits for an anti-corruption campaign. But it was mainly a way to amass more personal power than anyone since Mao. China actually remains deeply corrupt. While Xi has suppressed all dissension or debate, deploying pervasive propaganda and an Orwellian surveillance state. Thus China’s repression in Tibet, then Xinjiang, then Hong Kong. A million Xinjiang Uighurs are in concentration camps, an effort to pretty much stamp out their Muslim religion.

Today the idea of democracy has scant traction. What freedom Chinese do want is economic, which they’ve got. Politically most seem happy with dictatorship, if (as they believe) it manages the country well. In fact, they take pride in their system’s achievements, rejecting “Western” values like rule of law or press freedom, and feeling superior to democratic nations as dysfunctional, disordered, and declining. They support crushing Hong Kong’s democratic aspirations. Some social liberalism does surface mainly among the young, for causes like women’s equality, LGBT rights, and the environment. But most Chinese are more into consumerism and other personal stuff than public affairs. And remember that China has no historical ethos of individualism like ours, conformism being more the rule.

Also greatly shaping Chinese society is the one-child policy, harshly enforced between 1980 and 2016, to prevent overpopulation. It succeeded too well, causing a shortage of working age people. While a traditional preference for boys meant many girls aborted, with lone boys raised as spoiled princelings, and not enough females for them to marry. Add in desperate competition for university slots and housing costs becoming unaffordable, another damper on marrying.

Many millions had migrated from farms to cities for better pay, but the “hukou” system prevents their registry as official residents there, making them second class citizens. A deep social division. Meantime sweatshop factory jobs are disappearing, moving to even lower wage countries. Now many Chinese feel they’re in a rat race with “996” office jobs — 9 AM to 9 PM, six days a week.

There’d been hopes that an increasingly prosperous and secure China would become a well-behaved member of an interconnected global community. But clearly today’s China thinks differently. If Trump was right to see China more adversarially, unfortunately he followed up brainlessly, subverting our own interests. Not just with self-harming tariffs, but trying to decouple our economy from China’s, dividing the world into two economic ghettoes with separate supply chains, to our detriment. Particularly idiotic was confronting China alone, blowing off our allies who could have been marshaled into a united front.

But this needn’t be a new cold war. Whereas Soviets wanted the whole world Communist, China has no such agenda, being “Communist” in name only. Seeking instead just national aggrandizement. Mere cost-free kowtowing could actually help assuage that. What we really have is not combat but competition, and there’s a big difference. Competition among economic actors is always the way of the world, and should be, it’s the essence of our own free market system. The world is not zero-sum with China’s gain necessarily being our loss. They don’t stupidly imagine destroying America would be advantageous. We have to manage our competition for mutual advantage.

Of course that doesn’t mean overlooking China’s intellectual property theft and other unfair tactics. Just as we enforce rules within our own economy and punish violators but don’t seek to put them out of business. Nor do China’s human rights violations make it our enemy. That too we must call out, and mitigate whatever way possible; but again, that needn’t mean blowing up what’s mutually beneficial in our economic relationship.

Covid relief: can we get our heads straight?

December 30, 2020

Besides killing a third of a million Americans, sickening many millions, and disrupting our lives and metal health, the pandemic has been economically devastating. Something like 100,000 businesses have cut back or shut down, many permanently, hitting lower wage earners especially hard. On the other side of the tracks, anyone owning stocks has done very well. Thus further widening economic inequality.

I’m no left-wing social justice warrior, blaming economic disadvantage on the successful, considering their wealth morally “obscene.” But the question is what kind of society we want to live in. I want one that’s humane. With ameliorating human suffering a primary raison d’être.

Covid relief efforts have reflected such an ethos; sort of; up to a point. But, as seems endemic in human affairs, we don’t act with direct clarity, being waylaid by other interests and concerns.

Last spring’s initiative entailed $1200 checks. The latest, $600 checks (with efforts to increase them). But most Americans get them, instead of specifically targeting the neediest. Maybe figuring out who’s really needy would have been a fraught hassle. Or maybe too many would resent checks given to other people. Many Americans hate “welfare” but don’t put in that category any goodies they get from government. Anyhow, while the checks cost the nation hugely, the effect is diluted by spreading it so widely; the help to the neediest is piddling; and the aim of economic stimulus is also blunted, most recipients just holding onto the money rather than spending it.

The spring legislation also splashed out money supposedly to help businesses survive the pandemic. But this too was like an indiscriminate shotgun blast rather than laser-focused on where there was real need. The program wasn’t user-friendly, thus favoring big firms over the small ones that were actually hurting the most. Moreover, surprise, politically connected businesses somehow made off with bundles. Indeed, not just actual businesses. Joel Osteen’s cash-rich Texas megachurch got millions.

There’s also been an eviction moratorium, and New York State is enacting a more muscular version. Here again, instead of targeting the help where it’s most needed, it seems likely to benefit many better-off people. Supposedly, you’ll have to do paperwork showing hardship. The non-poor are better at working the system like that.

The eviction protection schemes point up a further problem. Keeping people from being thrown out on the streets is certainly a good intention, but there’s no free lunch, and legislators aren’t oriented at thinking about who pays. Here, we’re told that rent obligations are not being waived, that back rents will ultimately have to be paid. Oh, really? By tenants living from hand to mouth? In fact, is this eviction protection — or postponement? Kicking the can down the road (while making it heavier).

Of course nobody loves landlords. The word conjures fat aristocrats eating oysters in mansions while their peasant tenants starve. But actually, today we’re talking about businesses — supplying customers with a “good” in the truest sense, a roof over their heads — and rather than being a lucrative game, it’s actually a very tough business. And many are indeed the kinds of small businesses, hurt by the pandemic (often unable to collect rent), that other programs are supposedly aimed at helping — even while eviction moratoria screw them.

If low income tenants need help, how about government just manning up and paying their rent, instead of shoving the burden off on landlords?

Then there’s the student debt monster awaiting the Biden administration. With similar issues arising. How to help those truly in need, without most of the benefit going to people who are actually better off. College grads do tend to economically outpace the degreeless. Their student debt may seem onerous, but they made a calculated investment that should pay off handsomely over their working lives. On the other hand you have poorer students — poor in both senses — who gained little from their studies and now owe crippling debts. And where will the cost of debt relief really fall? Meantime, the whole student loan program was a big factor making colleges so expensive — knowing there was money there, they boosted tuition to soak it up. Forgiving loans will feed that syndrome.

The bottom line on all these issues is that we should just make a societal decision to help people truly in need (including for health care), as a basic principle. Not because that fits with some political ideology, but simply because it is humane and reflects our best selves. And we, as a society, should simply pay for it. Which we are amply rich enough to do. The costs of raising everyone to what we should all agree is a minimally decent living standard are actually dwarfed by benefits handed out to the better off without our batting an eyelash.

Russell Baker: “There’s a Country in My Cellar”

December 1, 2020

Russell Baker (1925-2019) was a New York Times reporter and then columnist. His book about growing up — titled, oddly enough, Growing Up— was a wonderful read. This 1990 selection of his columns was — pretty good. Mostly.

Baker starts off saying that when he first moved from news reporting to writing columns thrice weekly, he was exultant. Now “at last free to disgorge the entire content of my brain.”

However, he writes, “having written fewer than a dozen columns, I made a terrifying discovery: I had now disgorged the entire content of my brain, yet another column was due at once.”

Actually, he exaggerates. The book is full of exaggeration. It’s what he’s good at.

One piece, for example, “The Incredible Shrinking Life,”* chronicles the tribulations occasioned by rising New York City rents, forcing repeated moves to ever smaller apartments, and the painful sacrifices this entailed. The repeated refrain: it was like “being whittled away.” First to go, unable to fit them in a reduced space, were the children. It proceeds from there. Ending with accommodations too small for anyone over four feet tall. “A touch of sadness is only to be expected,” says the surgeon, “after you’ve been whittled away.”

Speaking of surgery, Baker presciently anticipates today’s trans phenomenon, with a very practical suggestion for men who’d prefer to have female bodies, and women who want men’s. They should just trade heads. If the experience fails to fulfill their expectations, they can simply switch back. Problem solved.

“The Excellence of Welby Stitch, Jr.,” purports to be a Harvard recommendation letter for the named young scholar. Whose record and personal qualities are glaringly rotten in every salient respect. All of which the letter gamely endeavors to spin in a derangedly positive light, as if to make a silk purse of the proverbial sow’s ear, turning standards on their heads. The letter ends with the signature: “Welby Stitch, Sr.”

“Boneless Sunday” sets forth a rather elaborate narrative set-up to enable Baker to finally pen the words, “Old Mother Hubbard went to the cupboard to get her poor dog a bone, but when she got there, the cupboard was bare.”** But that wasn’t the ending. The tale continues, “and so the poor dog left home to go to Acapulco with a Texas bone millionaire who loved the idea of a dog who could say, ‘Nuts to the King.'” Yes, the story had previously introduced a king, set before whom now is a pie. When told blackbirds had been baked into it, he says, “The cook must be losing his mind.” And “then the pie was opened and the birds began to sing.” The king was revolted, whispering “Ugh!” to the Queen.

“Shut up and eat a slice,” she says, lest he hurt the cook’s feelings.

But the king does more than hurt his feelings. The cook’s body is found in a ravine.

However, that still is not the end of this jam-packed story. Jack and Jill, and Little Miss Muffett, duly put in appearances. All in all, quite the literary tour-de-force.

Eating, being a major human activity, receives attention in other pieces. Baker’s gourmandizing is not too refined. He rhapsodizes about one of his favorites, the fried seafood platter, even telling of a 250 mile road trip just to hit one of the few restaurants that still serves it — at least in conformity with his exacting standards. But much as he describes relishing the dish, he actually makes it sound highly unappetizing. It seems it’s really the experience of the meal — you had to be there — not the flavor.

Money is a frequent preoccupation. No, make that obsession. Baker is always expostulating about how much things cost. One piece satirizes itemized hospital bills by chronicling his visit to a sick friend, being billed every step of the way, from the elevator ride to partaking of the illumination supplied in the corridors. A big point for him is people on expense accounts not paying with their own money. A lengthy commentary about the gravity-defying figure on a hotel bill (including an “occupancy” tax as if one might rent a room but not occupy it) concludes with the desk clerk fainting on hearing that Baker must pay with his own cash. Likewise, first class air travelers are shown laughing at the economy class peons because, “except for Rothschilds and madmen,” the former are never paying out of their pockets. And Baker notes that with business expenses tax deductible for companies, those first class tickets are actually paid for, in the end, by the taxpayers in economy class.

Speaking of taxpayers, there is “A Taxpayer’s Prayer,” couched in stentorian Biblical cadences. One line intones, “Yea, though we falter in meeting thy wishes,” it’s due to “our poor want of appreciation of thy marvelous law [i.e., the Internal Revenue Code] which surpasseth all understanding.”

So, yes, Baker is a humorist. Yet his temperament is curmudgeonly in a way I didn’t find endearing. A lot of this book is a howl against modernity, deeply felt. His modernity, of course, now decades past, which in today’s hindsight seems imbued with quaintness. I cringe to think what Baker would make of our current American culture.

I myself have written some pretty acerbic things on that subject. There’s always plenty to criticize and cluck one’s tongue at. But I come to it with a sensibility completely different from Baker’s. He seems to be one of those people who romanticize the “good old days,” forgetting what they were really like. Look at the opening scenes of Monty Python and the Holy Grail which, though hilarious, quite accurately depicted a time when life was “nasty, brutish, and short.” That continued being largely true until not very long ago. My immersion in history makes me never forget it; makes me profoundly grateful for modernity, with all its faults.

* For those too young to remember, there was a 1957 sci-fi film, The Incredible Shrinking Man. 

** Reminding me of a joke with a couple discussing the weather, and also an acquaintance who’s a Communist spy, to set up the punchline, “Rudolph the red knows rain, dear.”

The Nordic Theory of Everything: Lessons for America

November 23, 2020

America is a great country. Not perfect, but striving to improve — its best characteristic.

Anu Partanen was a young Finnish reporter, who moved here and was surprised by unfavorable comparisons with the Nordic countries — Norway, Sweden, Denmark, Finland, Iceland. Her book, The Nordic Theory of Everything, published in 2016 — pre-Trump — explains ways those nations promote human flourishing, which we can learn from.

American lefties see them as model socialist utopias; those on the right as cautionary tales of nannying welfare socialism. Both are wrong, Partanen shows. They’re not “socialist” at all, actually more free-market capitalist than America. That generates wealth, which they use not for “welfare states” so much as well-being states.

It’s what Partanen calls the “Nordic theory of love.” Creating social structures that free people from stresses and constraints, so they can live the best lives possible.

Partanen cites American principles of freedom, individualism, and opportunity, but came to see them as more theoretical than real, with the exigencies of American life actually forcing people into greater dependency, constraining their choices and freedom of action. Reading this, I wondered whether anti-mask fervor with all its misplaced “freedom” talk is a kind of transference, a cri de coeur over complex feelings of lost true personal freedom in today’s U.S. society. Going maskless is a simplistic counter.

Nordic family and parental leave, pensions, and other financial support policies tend to be far more generous than America’s. A main concern is child development, making an investment in the next generation. It’s recouped many times over when they grow into well-adjusted, productive, self-sufficient individuals. Family-friendly policies also make having children more attractive — combating low birth rates and boosting economies to the extent those children do become productive adults.

That’s all fine, but I felt Partanen was comparing Nordic societies mainly to America’s middle class with too little attention to less-than-affluent Americans, who seemed largely invisible to her. Yet that’s where our failure to invest in all youngsters really bites, getting us legions of poorly educated, poorly adjusted people, with problems of unemployability, crime, homelessness, addiction, etc. — ultimately costing society far more than it would have taken to make them contributing members in the first place.

Schooling is critical. Partanen writes about relatively well-off American parents struggling to advance their kids’ educational prospects, whereas Nordic parents don’t have to, feeling sure of good schooling. Again she doesn’t really discuss economically disadvantaged American kids, who are basically written off altogether. A key reason is U.S. schools funded mainly through local property taxes, inevitably magnifying the disadvantages of the poor. We give lip service to equal quality education for all children but accept falling woefully short. The Nordics really do it.

Turning to health care, our problems are familiar. It started because employee health insurance payments are tax-deductible by businesses and are tax-free income to workers. Making such insurance, tied to employment, ubiquitous. This structure adds huge administrative complexity and costs. And insurers’ economic incentive is not to serve customers but to deny coverage. While hospitals can get away with billing outrageous amounts, often not covered by insurance. Result: costs way higher than in other advanced nations, financially ruinous for many people, without buying us better health.

In Nordic nations health care is pretty much simply taken care of by government, so there’s no financial worry for citizens, nor wrestling with bureaucracies. Partanen respects Americans’ concern about freedom to choose one’s own doctor, etc., but concludes that real freedom is assurance of good care without hassles or money stress. This does entail higher taxes, but the bottom line is lower costs overall.

Tax comparisons are complicated (especially given America’s convoluted system) but broadly speaking most people actually pay similarly in both places. However, Americans must pay heavily for things, like health care, child care, elder care, and college tuition, that Nordics get from government for their taxes. Those countries seem to operate a lot leaner, so all those goodies don’t break the bank. And a big difference is the richest Americans paying lower effective rates than average people. Partanen wrote of that growing gap before Trump’s tax legislation made it even wider. Of course under-taxing the richest makes taxes higher for the rest. And Partanen writes that the Nordics prove how taxing the rich at fair (though not exorbitant or punitive) rates does not impair entrepreneurialism or economic prosperity.

Indeed, freeing businesses of obligations for employee health care and pensions enables them to be more dynamic and competitive. In global “ease of doing business” rankings, Nordics score higher than America. And they’ve cultivated the most valuable economic resource: human capital.

Not only have most Americans become dependent on employers for health care, Partanen observed another kind of dependency here — children all but smothered by helicopter parenting, while the elderly rely on their children for care. It all costs time, effort, and money. Making the financial aspects of marriage more salient while transforming it “into an unappealing morass of squandered careers, insane schedules, and lost personal liberty.” Becoming impossible for the less affluent, for whom marriage is falling by the wayside. That in turn stunts their children’s opportunities. Partanen concludes that American society just isn’t structured to support families. Unlike the Nordics and, indeed, just about every other modern wealthy country.*

It all comes down again to the “Nordic Theory of Love.” Making individuals independent and equal. This applies not only to married couples, but between parents and children, and vice versa. Hence the goal is really the opposite of “socialist dependency” — to remove all forms of dependency, within both the family and the larger society. To allow “all human relationships to be unencumbered by ulterior motives and needs, and thus to be entirely free, completely authentic, and driven purely by love.”

Some might say Nordic citizens are dependent too — upon government. But actually, what they get from government is just taken for granted, in the background of their lives. Very different from the personal dynamics made fraught by intra-family dependencies.

Partanen admires Americans’ positive attitude in spite of all the ways our society makes things hard, while Nordics tend to be morose despite societal structures more conducive to happiness. This seeming paradox reflects humans having well-being set-points independent of life circumstances. Thus the Nordic approach aims to enable people to be as happy as their innate personalities allow. And Americans could be even happier by emulating them.

I consider myself conservative, hating a nanny state telling people what to do; believing government should restrict us only as necessary to prevent harm to others. But rather than regimenting people, the Nordics aim to remove impediments and create the conditions for them to live the best lives possible according to their own proclivities.

America does do this, to a degree, through a complex web of social safety nets. But without any over-arching philosophy akin to a “theory of love.” And public support for such programs is weak, often seen as government giving undeserved handouts to moochers and “line cutters” at the expense of hard-working people. Racial antagonism is a factor, with the benefits being associated with minorities. While in fact such welfare payouts are modest in comparison to the government benefits middle class people receive, often without realizing it, as with tax breaks. The biggest “moochers” are corporations and the wealthy.

On the other hand, the left talks of inequality and “social justice.” I think that’s the wrong framing. “Justice” entails concepts of deservingness, which are arguable here. But unarguably, helping all our citizens to live good decent lives is simply humane. We should do it because they are our fellow human beings, and differing life circumstances are often due just to luck rather than merit or its lack. It would make this a better country for all of us. We are a very rich society that can amply afford it.

* Ironically, it’s “family values” conservatives most opposing policies to do that.

Lest we forget: the full Trump record

October 25, 2020

• Covid-19: America’s done virtually the worst of any advanced nation. Economy shut down, but so chaotically we got huge infection and death rates anyway. Fumbled for two crucial months while the virus spread. Trump lied and misled us at every stage, especially about testing. Admitted deliberately downplaying the danger while he knew its severity. Briefings were orgies of self-praise, misinformation, and divisive insults. Pushing conspiracy theories, a phony hydroxy “cure,” or injecting disinfectant and other quackery. Disregarding, even disparaging and attacking, scientific experts, calling them “idiots;” calling Anthony Fauci “a disaster;” testing “very foolish.” Encouraging protests against his own shutdown guidelines, mask-wearing, and social distancing. Politicizing it all. Withdrawing from the World Health Organization during this global health crisis. Zero feeling for victims. Millions sick, hundreds of thousands dead, economic disaster, massive unemployment, children’s education devastated, widespread psychological trauma. Controlling covid is the key to everything — but it’s now surging again to record levels, with the president still in denial and having no actual national plan. 

• Holding rallies and other gatherings without precautions, spreading the disease. Even at the White House, infecting numerous key officials. Including Trump himself, irresponsibly contaminating others (like Secret Service agents in a car for a pointless joyride). And still telling us covid is going away and is no big deal. As if we can all get the extraordinary medical treatment he did. 

• Threatening American democracy by undermining confidence in election results, refusing to accept them or to promise an orderly transfer of power. Instead sowing seeds for turmoil, trying to stop legitimate mail voting, with lies about fraud. His actual words: “Get rid of the ballots and we’ll have a very peaceful . . . There won’t be a transfer, frankly.” 

• Trying to sabotage the Postal Service to screw up mail voting and the whole election. 

• Encouraging an “army” of supporters to disrupt balloting and scare off voters. 

• Preparing for Republican-controlled state legislatures to override popular votes and appoint presidential electors for Trump regardless. 

• Voter suppression and intimidation, using every trick in the book to keep mainly Blacks from voting.  

• Trying to pervert the census for partisan advantage by adding a citizenship question, to reduce the count of Hispanics. Disallowed by the Supreme Court literally ruling it was based on a lie (i.e., that it was to help enforce the Voting Rights Act — which Trump’s administration has in fact been eviscerating). 

• Underfunding the census and ending it early, to ensure an undercount. Directing the exclusion of non-citizen residents, contrary to the constitution, and ruled illegal by federal courts. The aim of all this is to reduce political representation for targeted demographics and thus illegitimately boost Republican power. 

• At the border, seizing thousands of children away from parents, including babies and toddlers, with poor tracking so many will never be reunited. Caging them in appalling squalor. Lying this inhumanity was an Obama policy he stopped.

• Slashing our refugee quota by over 90%; but with new rules to make asylum effectively impossible.

• Sending suffering people lawfully seeking asylum back to other countries, or even politically repressive ones like Nicaragua where the regime will torture and kill them. This violates both U.S. and international law, which requires that asylum seekers have their cases heard before deportation. The inhuman cruelty of all this will stain America forever.

• Deporting parents of young children who are U.S. citizens.

• Even deporting underaged children, by themselves, just dumping them in Mexico and other countries with no adult help. 

• Canceling the DACA program which forestalled deportation of young adults brought here as children.  After the Supreme Court ruled that cancellation improper, flouting its decision by refusing to restore the program as before.

• Virtually halting even legal immigration. 

• All this immigration-bashing foolishly short-sighted, making us poorer economically (actually costing jobs), culturally, and morally. 

• Condoning racist and Neo-Nazi marchers in Charlottesville; “very fine people on both sides.”

• Leading promoter of the Obama “birtherism” lie; then lying that he was the one who stopped birtherism.

• Pardoning racist Sheriff Arpaio, convicted of defying court orders.

• Divisive comments threatening escalation of violence, regarding George Floyd protests. 

• Violent attack on peaceful protesters and journalists outside White House so he could walk to a church and pose with a Bible. 

• Militarized federal officers sent to Portland to attack and seize protesters, not stopping violence but instigating more of it. 

• Talking “law and order” in Kenosha while actually defending a teenaged pro-Trump vigilante who shot and killed two people. (Trump rants about “Antifa,” but 38 of 42 political-related killings last year were by right-wing extremists.) 

• Saying American-born members of Congress should “go back” to some other country.

• Slamming NASCAR for banning the Confederate flag. 

• Blocking the renaming of military bases named for Confederate generals. 

• Re-tweeting a video showing a supporter shouting “White power!” to which Trump added “Thank you.” Then lying about it. 

• Calling “Black Lives Matter” a “symbol of hate.”

• In debate, refusing to disavow white supremacists, like the Proud Boys hate group, telling them to “stand by.” 

• Yet lying that he’s the least racist of people.

• Telling a convention of policemen it’s good to rough up people arrested.

• Encouraging fans at his rallies to beat people up.

• “Drain the swamp?” An administration that’s a rogues gallery of corrupt lowlife creeps and incompetents.

• Hiding his income tax filings, lying that being under audit prevents disclosure. 

• Turns out he actually paid just $750 in income tax in 2016 and 2017; zero in ten of the 15 prior years. He’s also $421 million in debt, we don’t know to whom, and has previously hidden bank accounts in China and other countries.  

• Enacting a tax cut that’s mainly a giveaway to the wealthiest, and lying that it wouldn’t benefit him.

• Exploiting the presidency for personal gain (like actually billing the Secret Service for accommodations in his buildings while protecting him).

• A New York Times investigation found over 200 companies, special-interest groups, and foreign governments funneled millions into Trump’s properties while reaping benefits from him and his administration — “a system of direct presidential influence-peddling unrivaled in modern American politics.”

• “Grab them by the pussy.”

• Numerous credible accounts of sexual assault, including literal rape. 

• Illegal payoffs to porn stars to hush up adulteries. Lying about this.

• In Helsinki, accepting Putin’s lies against the conclusions of U.S. intelligence services that Russia subverted our 2016 election on Trump’s behalf.

• Firing FBI Director Comey because he wouldn’t bury the investigation of Russian meddling. Lying about the firing. 

• A new August 2020 Republican-led Senate Intelligence Committee Report confirms major Russian interference in the 2016 election, with Trump’s campaign chief Manafort colluding with Russian intelligence operatives. 

• Falsely accusing U.S. law enforcement agencies of improperly investigating, and “spying on,” his campaign.

• Appointing Attorney General Barr who lied about what the Mueller report said. 

• Doing nothing about Russian subversion of 2020 election. Denying congressional access to information on the subject. 

• Political interference in Roger Stone case, pressuring DOJ to change its sentencing recommendation. And after even Barr said Stone’s prosecution was proper and the sentence fair, Trump nevertheless commuted his crony’s sentence — for criminally lying on Trump’s behalf. 

• Firing National Security Advisor Michael Flynn for lying, then saying Flynn was “treated very unfairly.”

• Justice Department dropping charges against Flynn, despite his pleading guilty for lying to the FBI. 

• Justice Department firing U.S. Attorney Berman in New York, after falsely announcing he’d resigned. Berman was investigating Trump associates. 

• Justice Department assuming Trump’s defense in a private lawsuit regarding a rape allegation, putting taxpayers on the hook for legal costs and even for any liability.

• Pressuring Justice Department, weeks before the election, to bring charges against political opponents (including Clinton, Obama, Biden) for fantastical imaginary crimes.

• Undermining military discipline by pardoning soldiers court-martialed and convicted of war crimes.

• Insulting war hero John McCain.

• Insulting Khizr Khan, whose U.S. soldier son was killed in Iraq.

• Reliably quoted saying soldiers killed and wounded are “losers” and “suckers,” those who fought in Vietnam should have gotten out of it like he did, and he couldn’t understand why anyone would choose the military over money-making. 

• Tweeting “All talk, no action” about Congressman John Lewis — whose skull was fractured at Selma’s Edmund Pettus Bridge. 

• Covering for Saudi ruler’s murder of critic Kashoggi.

• Congratulating Philippine President Duterte’s handling of a drug problem — by having thousands murdered.

• Claiming a love affair with murderous North Korean dictator Kim Jong Un.

• Telling China’s Xi Jinping that putting a million Uighurs into concentration camps for trying to practice their religion is “the right thing to do.” 

• Saying Xi’s eliminating presidential term limits is a great idea that we should try. 

• Betraying our Kurdish allies by enabling Turkish dictator’s invasion of their northern Syria territory.

• Leaking sensitive classified information to the Russian ambassador right in the White House.

• Ignoring intelligence that Russia offered the Taliban bounties for killing U.S. soldiers in Afghanistan. Lying that he didn’t know about it.

• Fawning over other dictators while insulting our democratic allies.

• Economically ruinous trade war with China, costing more jobs than it saves (because U.S. manufacturers must pay more for inputs), costing U.S. consumers billions in higher prices (estimated to average nearly $1300 per household), and costing taxpayers billions to counter part of the damage to farmers. Lying that it’s China paying. 

• Boasting of a great economy (which he inherited from Obama, and which his covid incompetence destroyed). But Trump’s term really just proves that if you mortgage our future by pumping a trillion a year of federal deficit spending into the economy, the economy will look good.  

• Remember his campaign promise to balance the budget and eliminate the deficit? Ha ha.  

• Pulling out of Iran deal, thus speeding Iran’s path to nuclear weapons and destabilizing the region.

• Pulling out of Paris climate accord (America now the only significant nation outside it).

• Shutting down the government because Congress wouldn’t fund his wall.

• Funding his wall by pilfering from the military budget.

• Lying that Mexico would pay for the wall.

• Lying that Obama bugged his campaign.

• Lying about his inauguration crowd size.

• Lying about seeing New Jersey Muslims celebrating 9/11.

• Praising and parroting conspiracy monger Alex Jones, who persecuted grieving Sandy Hook parents by calling them actors in a phony school shooting cooked up by the government, among numerous other insane delusions.

• Praising the “QAnon” conspiracist network (considered a domestic terrorism threat by the FBI), and retweeting QAnon content hundreds of times. The group, among other things, accuses Trump opponents of pedophilia and baby eating.

• Retweeting that President Obama’s administration didn’t kill Bin Laden, but a body double, and shot down a Navy Helicopter, killing Seal Team members, to cover it up.

• Supporting the candidacy of pedophile Roy Moore.

• Accusing a critic, TV commentator Joe Scarborough, of a murder that never happened. 

• Pledging to protect healthcare for pre-existing conditions while his administration was in court seeking to end it.

• For years promising to replace Obamacare with a better program but never coming up with any. 

• Illegally withholding military aid to our ally Ukraine, trying to use the aid to bribe/extort its president into smearing Biden.

• Trying to cover it up, lying about it, and defying lawful Congressional subpoenas for testimony and documents about it.

• Punishing government officials who told the truth about it. 

• Calling journalists “enemies of the people” for reporting truth he doesn’t like.

• Subverting security clearance procedures for family members.

• His “business” history of multiple bankruptcies leaving others holding the bag after he skimmed off assets.

• While routinely refusing to pay his bills, resulting in literally thousands of lawsuits.

• Inheritance tax fraud, documented by the NY Times.

• The “Trump University” fraud for which he paid a $25 million settlement.

• His “charitable foundation” fraud, resulting in a multimillion dollar settlement, and his being legally barred from the charitable field altogether. 

• Contributions to his “charity” diverted to his political campaign, and even to buy a portrait of himself. 

• Siphoning off money contributed to his campaign (like the $55,000 it paid to Trump for copies of his own book).

• His own longtime “fixer” Michael Cohen told Congress Trump is a “a racist . . . a con man . . . a cheat.”

• Employing 200 illegal immigrants in building Trump Tower.

• Found guilty by a federal judge of conspiring to avoid payment of union pension contributions for those workers. 

• Paying someone to take the SAT test for him. 

• By his own account, spending most of his White House time watching TV (almost all Fox) while refusing to read briefing papers. 

• Destroying the staffing and morale of the State Department, crippling America’s overseas diplomacy and influence.

• Governing only for his supporters, not the rest of America. 

• Literal insanity; severe narcissistic personality disorder; depraved indifference to anyone but himself; a sociopath. Confirmed by his own sister and professional psychologist niece in the latter’s book. 

• Over 22,000 documented lies in addition to those noted above; a war on the concept of truth itself.

• Foreigners see all this, and admiration for America has plummeted. Foreign leaders play him like a fiddle with flattery, laughing behind his back. A recent global poll showed more people now look to China for leadership.

• In countless additional ways degrading America’s dignity and political and civic culture; empowering racists, enflaming people’s worst instincts and tribal divisiveness; undermining our democratic values, governmental accountability, and rule of law; undermining our global leadership, our network of international alliances, and the cooperative rules-based world order America hugely invested in building since World War II, which has been a bulwark of our national security and prosperity. All together, shredding the principles and ideals America used to stand for.

Nothing here is fake news, lies, hoaxes, smoke, or BS. But facts, truth, reality. Maybe you can rationalize away some of it. But all of it? 

Joe Biden is a decent, honest, compassionate, conscientious man. Caring about others. A man of great integrity, intelligence, and deep experience. Who genuinely loves this country and its people. Who built his long distinguished career as a political moderate, a man of the center. Who builds bridges, not burns them. Who is sane.

Trump tries to smear him with lies, as some doddering old fool, corrupt, a tool of extremists, who will destroy the country. All ridiculous. Idiotic. Disgusting. That’s who Trump is. 

This election is about far more than policies or issues. It’s about what kind of country we are. America’s democracy and heart and soul. If you somehow imagine this a better country with Trump than Biden, I beg you to shine a searchlight into your own heart and soul. 

Vote for hope, not fear. Truth, not lies. Love, not hate. For democracy, not autocracy. For national reconciliation — not worsening tribal division. For plain simple decency and sanity.

The Black Swan

October 19, 2020

You get fed every day. All you can eat. Treated very nicely too. As such days go by, you grow ever more confident they will continue. Then comes Thanksgiving — and you are a turkey.

Or a sucker, says Nassim Nicholas Taleb in his book The Black Swan – The Impact of the Highly Improbable. Like that turkey, we are all suckers of a sort in failing to anticipate the possibility of a dramatic discontinuity in our reality. What Taleb calls a “black swan.” We may believe all swans are white, until a black one comes along, blowing up that assumption.

The book is fascinating, engaging, thought-provoking. It was published in 2007, just before a big black swan, the financial crisis. And reading it in 2020 gave it special added force. The Trump presidency makes many of us feel like that turkey. And then of course the pandemic hit.

The book’s watchword is unpredictability. Taleb considers it an inherent characteristic of existence. Yet we go through life seeming to ignore that. Thinking we know what’s going on, when in a deep sense we do not. Taleb is from Lebanon, his perspective shaped by the trauma of its 1975-90 civil war — coming after a thousand years of sectarian comity, this unforeseen black swan utterly changed the country.

Taleb divides things between Mediocristan and Extremistan. In the former, as its name implies, matters cluster around a middle, dictated by averages, conforming to a bell curve. Take height for example. Outliers like three foot dwarves and seven foot basketballers exist but disappear into the average, hardly affecting it because of the vast numbers closer to the middle.

But while in Mediocristan you do get people 50% above average, for something like wealth the outliers are thousands of times higher, with big effects on the overall picture. That’s Extremistan. Taleb sees reality as more like Extremistan; yet again we behave largely as Mediocristanis.

Trump’s election prompted an avalanche of analysis. Seemingly a tectonic cataclysm, but remember it was extremely close. Had it tipped the other way, the after-talk would have been totally different. His 2020 defeat will be, in major part, attributable to the pandemic. But for that, history might be going in a very different direction.

However — those things are not in fact black swans as Taleb defines the term. (He’d actually call them gray swans.) His black swan is something not just unforeseen but unforeseeable (except in hindsight). Taleb says we retrospectively paste our explanations onto past events as though they were (or should, or could, have been) foreseeable. But history just doesn’t work that way.

Reality is complex to an extreme degree. To navigate it, one’s mind creates a representation of it that is perforce vastly oversimplified. I’m reminded here of “LaPlace’s demon,”  hypothetically knowing literally everything about the Universe at a given moment — what every particle is doing — enabling it to predict the next moment (and the next). Of course humans are way short of that. One of Taleb’s key points is insufficiency of information available to us. Especially what Donald Rumsfeld famously called “unknown unknowns” — things we don’t realize we don’t know.

The book mentions the “butterfly effect” — a butterfly flapping its wings in China causing a storm in Kansas. I’m not sure that can ever literally happen, but the point is that a very small cause can trigger a very big effect. A black swan. Which we cannot foresee because we, unlike LaPlace’s demon, cannot assess every small thing happening in the world at a given moment. And, Taleb argues, the black swan’s disproportionately big impact renders what we do know about the world pretty much nugatory.

While most of us did not expect Trump’s presidency, we did at least see it as within the realm of possibility. And many voices had long been warning of a pandemic, someday, much like what we’ve got. It makes sense (though not to Trump) to prepare for such things. Los Angeles has preparations for an earthquake bound to happen someday. But in human psychology, “someday” is not an immediate concern, and for all practical purposes Angelenos live their lives in disregard of the earthquake threat. Just as we all did regarding the possibility of a pandemic. That’s actually not crazy.

Taleb is scathing about hosts of so-called experts, analysts, economists, etc., calling them frauds who are anchored in Mediocristan and oblivious toward Extremistan. Who don’t know what they don’t know. Taleb cites psychologist Philip Tetlock’s famous study of political and economic “experts,” analyzing their predictions compared against results. Their predictions stunk. And the bigger their reputations the worse they stunk. Taleb comments: “We attribute our successes to our skills, and our failures to external events outside our control.” I recall hearing one forecast Taleb would have applauded: a “psychic” who predicted “unpredictable weather!”

Taleb’s particular bête noir is the Gaussian bell curve, which he deems an artifact of Mediocristan with scant applicability to the real world. I disagree, considering the bell curve a useful conceptual tool for understanding. For example, regarding the mentioned distribution of heights. Though of course one has to know when not to apply a bell curve. A black swan can blow it up, as Taleb insists.

For the stock market, you might expect daily ups and downs to fall along a bell curve — that is, most clustering around the average daily change, with the more extreme moves growing in rarity as they grow in size. That would be Mediocristan. But again Taleb thinks that’s not reality. He presents an analysis showing that if you remove from a fifty year stock market chart the ten most extreme days, the total return falls by half.

Another point is that absence of evidence is not evidence of absence. Taleb cites the story of the ancient philosopher (Epicurus) shown portraits of sailors who prayed to the gods and survived shipwrecks. “But where,” he asked, “are the pictures of those who prayed, then drowned?” Of course those couldn’t testify about their experience. That’s absence of evidence, or what Taleb calls “silent evidence.”

So what should we do? Taleb says (his emphases) “the notion of asymmetric outcomes is the central idea of this book: I will never get to know the unknown since, by definition, it is unknown. However, I can always guess how it might affect me, and I should base my decisions around that . . . . This idea that in order to make a decision you need to focus on the consequences (which you can know) rather than the probability (which you can’t know) is the central idea of uncertainty. Much of my life is based on it.”

Reading this charitably, Taleb spent most of his life in financial markets, and that’s the context he’s mainly talking about. But as advice for life more generally — it’s insane.

One problem with his above quote is that if something really isunknown, you can’tguess its effect. But even in the realm of the knowable, myriad possibilities for disasters could conceivably strike us. We may not be able to gauge their probabilities with precision, but we can in fact know they are individually very small. A life spent trying to avoid every remote danger would be absurd. If you actually followed Taleb’s advice and focused on the potential (very large) impacts in disregard of their (very small) probabilities — you would never get out of bed in the morning.

No, we cannot know everything, and can be hit hard by things we couldn’t foresee. But we do the best we can. Evolution gave us minds — and psychologies — that, for all their undoubted limitations, are actually pretty darn good at equipping us to navigate through life and avoid pitfalls. Otherwise we wouldn’t be here.

A dozen daffy delusions

October 17, 2020

1. Urban rioting is scarier than Covid-19.1

2. Only Trump can fix it.2

3. Face masks infringe on freedom.3

4. Immigration is bad for us.4

5. Foreign trade costs jobs.5

6. Gun ownership makes people safer.6

7. Whites are better than blacks.7

8. 2016 Russian election meddling was a hoax.8

9. Trump tells it like it is.9

10. He can only lose the election by fraud.10

11. He’s making America great again.11

12. He’s chosen by God.12

Footnotes:

1. Covid’s human and economic toll is literally thousands of times greater.

2. Trump stokes the societal divisions that lead to such violence. And he’s screwed up horribly on Covid.

3. Science is clear that masks curtail the spread of disease. Nobody has “freedom” to endanger others.

4. Immigrants contribute workers and skills we need, creating wealth, paying taxes, and adding consumer demand that means more jobs.

5. Trade enables consumers to buy things cheaper, leaving them with more money to spend on other things, which in turn creates more jobs, not fewer.

6. A gun in the home is way more likely to injure a family member than an intruder. America’s gun violence far outstrips other countries, because of less regulation and more guns.

7. Anyone believing that proves their own inferiority.

8. Major Russian subversion was conclusively proven by evidence.

9. He’s the biggest liar ever (also proven).

10. He can only win the election by fraud, because sensible Americans are fed up with his freak show.

11. His mishandling Covid and the resultant economic fallout hugely damages America. His disgusting behavior degrades our global standing.

12. There is no God. But if there were, he’d be a fool to rely on Trump.

Bidenomics: What to expect

October 10, 2020

Trump tries to scare voters with a bogeyman Biden — a captive of left-wing radicals who will turn America socialist, open borders, unleash violence, destroy suburbs, and more. All utterly idiotic. Only fools fall for it.

Biden’s always been determinedly centrist, a political moderate, a pragmatist, deeply respecting the hard-working middle class. In the primaries he decisively crushed his party’s leftist minority. True, he afterward created a task force to flatter them by crafting a diluted version of their policies. He’s diluted it further in his own policy pronouncements. As president he’ll be his own man. And he’ll have to work through a Congress where moderates likewise dominate among Democrats.

The stock market has risen even as a Biden presidency grows likelier. Wall Street obviously doesn’t foresee an anti-capitalist socialist administration.

The Economist has presented a thorough analysis of what “Bidenomics” probably portends. That pro-market publication likewise fears no radicalism. If anything, it says, Biden may be insufficiently daring.

Job One will be the covid-induced economic crisis, that’s hit the less affluent worst, and ravaged state and local government budgets. Trump’s insane refusal to negotiate anything before the election will give Biden full responsibility. This should mean a major, costly recovery initiative, particularly helping small business, largely left out so far. Infrastructure will be a key part, with a big green tinge. Rock-bottom interest rates make financing this fairly painless. Though eventually we must get to grips with our huge ongoing taxing/spending imbalance. The Economist isn’t betting on Biden biting that bullet.

He should, however, address the imbalance within the tax structure, worsened by Trump’s inexcusable giveaway to the richest. People like me must pay a fairer share. We should also see a long-overdue Medicare-like government health insurance option for people wanting it. Biden will also likely tackle college costs and student debt, though here again, the most radical “free-for-all” ideas will be non-starters, with help instead targeted to those most in need.

On trade, it’s unfortunate that Biden’s free trade instincts probably can’t overcome the self-harming protectionism that now infects both parties. So Trump’s stupid tariffs will be hard to unwind.

Further, Biden seems stuck in a retro mindset emphasizing manufacturing’s economic role. This vain dream of “bringing back American manufacturing jobs” has bedeviled us for decades. We actually manufacture as much as ever, but do it with ever less labor, thanks to technological advances. That’s a good thing. Our future prosperity does not lie with manufacturing but with the technology that pervades it and every other aspect of modern life.

America’s economy is meanwhile becoming sclerotic. A key reason corporate profits (and stocks) are strong is decreasing competition. Small business creation was lagging even before the pandemic crippled that sector. The commanding position of the tech giants is obvious. The Economisthopes Biden will revitalize antitrust enforcement and otherwise act to open up the economy to make it more competitive.

But the great contrast with Trump will be restoration of the ideals of public service and conduct that he so traduces. Biden will act conscientiously and responsibly, getting and heeding good advice rather than disdaining it, working within America’s time-tested institutions rather than trying to blow them up. He will govern for all Americans, not just a minority of diehard fans. Honoring our democratic traditions. A return to sanity, rebuilding what Trump has knocked down.

It’s all crystallized by Trump’s sickening attack on the credibility of our election, encouraging supporters to disrupt it based on ballot fraud lies, so he can overturn the results. Making America into a banana republic.

That’s what’s really at stake in this election. First, save the country. Then worry about economic policy.

Economics and sex

September 10, 2020

(NOTE: the following was actually written before the pandemic (I have a backlog). Question for discussion: how is this analysis altered, if at all, by the new economic environment created by the pandemic?)

I heard Professor Paul Hohenberg review Binyamin Applebaum’s book, The Economists’ Hour. That title plays off “The Children’s Hour” with a hint that economists don’t do much better. The book chronicles recent decades when they had much influence on policy. Hohenberg says two things ended that: the 2008 financial crisis, leaving economists with egg on their faces; and Trump’s election, blowing up the whole idea of relying on expertise.

Government used to be dominated by lawyers, Hohenberg noted. But that was when it didn’t do much. That changed with the Depression, WWII, and the rise of the welfare state, with government now seen as managing the economy.

The basic challenge there is stability. Its textbook is John Maynard Keynes’s 1936 opus, The General Theory of Employment, Interest, and Money. Positing a tradeoff between unemployment and inflation. If unemployment is low, businesses must compete for staff, driving up wages, which must be recouped through raising prices — inflation. Which tends to feed on itself by shrinking the value of paychecks, driving workers to demand still higher pay. It was thought some optimal unemployment level would keep things in balance.

But the ’70s brought “stagflation,” high unemployment coupled with high inflation, breaking Keynes’s law. The explanation, Hohenberg says, was demographic. Baby Boomers reaching adulthood flooded the workforce. Also women, now much freer to work outside the home. These extra working hands produced much wealth and higher living standards, but the economy couldn’t create new jobs fast enough, hence high unemployment. While higher family incomes boosted consumer demand, pushing up inflation.

It took a serious recession to break stagflation, thanks to Fed Chief Volcker aggressively raising interest rates. Since then, the problem has actually been to get enough inflation to avoid deflation, a different economic curse.

Keynesianism also meant government stabilizing the economy through the stimulus of spending when it’s weak, borrowing the needed money, then reversing course when the economy is strong. Stimulus does seem to work, notably in 2009. But it’s unfortunately addictive, and politicians like to keep the spigot open even when the economy is booming.

Meantime the anti-Keynesian stagflation episode brought to the fore a different economic theory — monetarism, personified by Milton Friedman, arguing that it’s really through regulating the money supply that government controls economic ups and downs. But just as Keynesianism proved oversimplified, monetarism too is not the whole story.

There was also “supply-side” economics, touting tax cuts as stimulus, arguably engendering enough added economic activity that the cuts would actually pay for themselves. This has been widely derided. However, there ought to be some optimal level of taxation, enabling government to collect enough revenue while maximizing the economic activity that produces earnings to be taxed. Whether tax cuts “pay for themselves” probably depends on how they’re structured and who benefits.

With my bodyguards in Somaliland

Hohenberg also discussed free market fundamentalism, trying to limit regulation so that business and industry can just get on with wealth-creation. I have noted, apropos my Somaliland visit, how government’s scant regulation there actually leaves businesses vulnerable to predation and thus inhibits economic activity. Here again the issue really isn’t regulation versus no regulation. It’s having the right kind of regulation that protects the right things, thereby maximizing economic opportunities. But that’s hard to do, and government hasn’t proven very good at it.

Also a butt of ridicule is so-called “trickle down” economics. This relates to the cause du jour, inequality. There’s a notion of equalizing things by just taxing away the wealth of the rich. (Sanders says billionaires should not even exist.) It’s legitimate to have affluent people pay a greater share if government needs the money to fund what it does. Taxing them simply because some envious people feel they just have too much is not any kind of “justice,” social or otherwise.

Hohenberg observed that, ironically, economists get attention when there’s debate but not when there’s consensus. They almost unanimously support a carbon tax; politicians almost unanimously demur. And while practically all economists say trade is beneficial, few politicians have the courage to argue this, and so the public increasingly rejects it.

One audience questioner posited we should just seal America off from global trade and meet all our needs domestically. At least we’d all have jobs. Whereas trade leaves too many without — increasing our impoverishment, ever more Americans unable to afford all the goods being imported.

This idea is indeed commonly believed. But it’s quite false. As Hohenberg explained, the autarky envisioned by the questioner would send consumer prices through the roof; buying stuff cheaper from China than we can make it ourselves saves us money and thus enriches us. The savings we can spend buying other stuff we do make ourselves. It’s also untrue that the average American has been growing poorer. Average incomes have been rising, and trade plays a role in that.

And it’s also untrue that “we don’t make anything anymore.” We manufacture as much as ever, but can do so with ever less labor; it’s advancing technology and automation, far more than trade, that’s responsible for reduced manufacturing employment. But that increased productivity also makes us richer. It frees up labor to do other things, particularly in services, which consumers increasingly spend money on. There’s a notion that producing intangible services is somehow less real than manufactured goods. That’s yet another fallacy; people’s willingness to pay money for something decides its value.

And finally, what about the “sex” promised in my heading? This illustrates another concept of economics. Called “bait and switch.”