Is the cure for inflation worse than the disease?

Nov 13 JDN 2459897

A lot of people seem really upset about inflation. I’ve previously discussed why this is a bit weird; inflation really just isn’t that bad. In fact, I am increasingly concerned that the usual methods for fixing inflation are considerably worse than inflation itself.

To be clear, I’m not talking about hyperinflationif you are getting triple-digit inflation or more, you are clearly printing too much money and you need to stop. And there are places in the world where this happens.

But what about just regular, ordinary inflation, even when it’s fairly high? Prices rising at 8% or 9% or even 11% per year? What catastrophe befalls our society when this happens?

Okay, sure, if we could snap our fingers and make prices all stable without cost, that would be worth doing. But we can’t. All of our mechanisms for reducing inflation come with costs—and often very high costs.

The chief mechanism by which inflation is currently controlled is open-market operations by central banks such as the Federal Reserve, the Bank of England, and the European Central Bank. These central banks try to reduce inflation by selling bonds, which lowers the price of bonds and reduces capital available to banks, and thereby increases interest rates. This also effectively removes money from the economy, as banks are using that money to buy bonds instead of lending it out. (It is chiefly in this odd indirect sense that the central bank manages the “money supply”.)

But how does this actually reduce inflation? It’s remarkably indirect. It’s actually the higher interest rates which prevent people from buying houses and prevent companies from hiring workers which result in reduced economic growth—or even economic recession—which then is supposed to bring down prices. There’s actually a lot we still don’t know about how this works or how long it should be expected to take. What we do know is that the pain hits quickly and the benefits arise only months or even years later.

As Krugman has rightfully pointed out, the worst pain of the 1970s was not the double-digit inflation; it was the recessions that Paul Volcker’s economic policy triggered in response to that inflation. The inflation wasn’t exactly a good thing; but for most people, the cure was much worse than the disease.

Most laypeople seem to think that prices somehow go up without wages going up, but that simply isn’t how it works. Prices and wages rise at close to the same rate in most countries most of the time. In fact, inflation is often driven chiefly by rising wages rather than the other way around. There are often lags between when the inflation hits and when people see their wages rise; but these lags can actually be in either direction—inflation first or wages first—and for moderate amounts of inflation they are clearly less harmful than the high rates of unemployment that we would get if we fought inflation more aggressively with monetary policy.

Economists are also notoriously vague about exactly how they expect the central bank to reduce inflation. They use complex jargon or broad euphemisms. But when they do actually come out and say they want to reduce wages, it tends to outrage people. Well, that’s one of three main ways that interest rates actually reduce inflation: They reduce wages, they cause unemployment, or they stop people from buying houses. That’s pretty much all that central banks can do.

There may be other ways to reduce inflation, like windfall profits taxes, antitrust action, or even price controls. The first two are basically no-brainers; we should always be taxing windfall profits (if they really are due to a windfall outside a corporation’s control, there’s no incentive to distort), and we should absolutely be increasing antitrust action (why did we reduce it in the first place?). Price controls are riskier—they really do create shortages—but then again, is that really worse than lower wages or unemployment? Because the usual strategy involves lower wages and unemployment.

It’s a little ironic: The people who are usually all about laissez-faire are the ones who panic about inflation and want the government to take drastic action; meanwhile, I’m usually in favor of government intervention, but when it comes to moderate inflation, I think maybe we should just let it be.

The United Kingdom in transition

Oct 30 JDN 2459883

When I first decided to move to Edinburgh, I certainly did not expect it to be such a historic time. The pandemic was already in full swing, but I thought that would be all. But this year I was living in the UK when its leadership changed in two historic ways:

First, there was the death of Queen Elizabeth II, and the coronation of King Charles III.

Second, there was the resignation of Boris Johnson, the appointment of Elizabeth Truss, and then, so rapidly I feel like I have whiplash, the resignation of Elizabeth Truss.

In other words, I have seen the end of the longest-reigning monarch and the rise and fall of the shortest-reigning prime minister in the history of the United Kingdom. The three hundred-year history of the United Kingdom.

The prior probability of such a 300-year-historic event happening during my own 3-year term in the UK is approximately 1%. Yet, here we are. A new king, one of a handful of genuine First World monarchs to be coronated in the 21st century. The others are the Netherlands, Belgium, Spain, Monaco, Andorra, and Luxembourg; none of these have even a third the population of the UK, and if we include every Commonwealth Realm (believe it or not, “realm” is in fact still the official term), Charles III is now king of a supranational union with a population of over 150 million people—half the size of the United States. (Yes, he’s your king too, Canada!) Note that Charles III is not king of the entire Commonwealth of Nations, which includes now-independent nations such as India, Pakistan, and South Africa; that successor to the British Empire contains 54 nations and has a population of over 2 billion.

I still can’t quite wrap my mind around this idea of having a king. It feels even more ancient and anachronistic than the 400-year-old university I work at. Of course I knew that we had a queen before, and that she was old and would presumably die at some point and probably be replaced; but that wasn’t really salient information to me until she actually did die and then there was a ten-mile-long queue to see her body and now next spring they will be swearing in this new guy as the monarch of the fourteen realms. It now feels like I’m living in one of those gritty satirical fractured fairy tales. Maybe it’s an urban fantasy setting; it feels a lot like Shrek, to be honest.

Yet other than feeling surreal, none of this has affected my life all that much. I haven’t even really felt the effects of inflation: Groceries and restaurant meals seem a bit more expensive than they were when we arrived, but it’s well within what our budget can absorb; we don’t have a car here, so we don’t care about petrol prices; and we haven’t even been paying more than usual in natural gas because of the subsidy programs. Actually it’s probably been good for our household finances that the pound is so weak and the dollar is so strong. I have been much more directly affected by the university union strikes: being temporary contract junior faculty (read: expendable), I am ineligible to strike and hence had to cross a picket line at one point.

Perhaps this is what history has always felt like for most people: The kings and queens come and go, but life doesn’t really change. But I honestly felt more directly affected by Trump living in the US than I did by Truss living in the UK.

This may be in part because Elizabeth Truss was a very unusual politician; she combined crazy far-right economic policy with generally fairly progressive liberal social policy. A right-wing libertarian, one might say. (As Krugman notes, such people are astonishingly rare in the electorate.) Her socially-liberal stance meant that she wasn’t trying to implement horrific hateful policies against racial minorities or LGBT people the way that Trump was, and for once her horrible economic policies were recognized immediately as such and quickly rescinded. Unlike Trump, Truss did not get the chance to appoint any supreme court justices who could go on to repeal abortion rights.

Then again, Truss couldn’t have appointed any judges if she’d wanted to. The UK Supreme Court is really complicated, and I honestly don’t understand how it works; but from what I do understand, the Prime Minister appoints the Lord Chancellor, the Lord Chancellor forms a commission to appoint the President of the Supreme Court, and the President of the Supreme Court forms a commission to appoint new Supreme Court judges. But I think the monarch is considered the ultimate authority and can veto any appointment along the way. (Or something. Sometimes I get the impression that no one truly understands the UK system, and they just sort of go with doing things as they’ve always been done.) This convoluted arrangement seems to grant the court considerably more political independence than its American counterpart; also, unlike the US Supreme Court, the UK Supreme Court is not allowed to explicitly overturn primary legislation. (Fun fact: The Lord Chancellor is also the Keeper of the Great Seal of the Realm, because Great Britain hasn’t quite figured out that the 13th century ended yet.)

It’s sad and ironic that it was precisely by not being bigoted and racist that Truss ensured she would not have sufficient public support for her absurd economic policies. There’s a large segment of the population of both the US and UK—aptly, if ill-advisedly, referred to by Clinton as “deplorables”—who will accept any terrible policy as long as it hurts the right people. But Truss failed to appeal to that crucial demographic, and so could find no one to support her. Hence, her approval rating fell to a dismal 10%, and she was outlasted by a head of lettuce.

At the time of writing, the new prime minister has not yet been announced, but the smart money is on Rishi Sunak. (I mean that quite literally; he’s leading in prediction markets.) He’s also socially liberal but fiscally conservative, but unlike Truss he seems to have at least some vague understanding of how economics works. Sunak is also popular in a way Truss never was (though that popularity has been declining recently). So I think we can expect to get new policies which are in the same general direction as what Truss wanted—lower taxes on the rich, more privatization, less spent on social services—but at least Sunak is likely to do so in a way that makes the math(s?) actually add up.

All of this is unfortunate, but largely par for the course for the last few decades. It compares quite favorably to the situation in the US, where somehow a large chunk of Americans either don’t believe that an insurrection attempt occurred, are fine with it, or blame the other side, and as the guardrails of democracy continue breaking, somehow gasoline prices appear to be one of the most important issues in the midterm election.

You know what? Living through history sucks. I don’t want to live in “interesting times” anymore.

Updating your moral software

Oct 23 JDN 2459876

I’ve noticed an odd tendency among politically active people, particular social media slacktivists (a term I do not use pejoratively: slacktivism is highly cost-effective). They adopt new ideas very rapidly, trying to stay on the cutting edge of moral and political discourse—and then they denigrate and disparage anyone who fails to do the same as an irredeemable monster.

This can take many forms, such as “if you don’t buy into my specific take on Critical Race Theory, you are a racist”, “if you have any uncertainty about the widespread use of puberty blockers you are a transphobic bigot”, “if you give any credence to the medical consensus on risks of obesity you are fatphobic“, “if you think disabilities should be cured you’re an ableist”, and “if you don’t support legalizing abortion in all circumstances you are a misogynist”.

My intention here is not to evaluate any particular moral belief, though I’ll say the following: I am skeptical of Critical Race Theory, especially the 1619 project which seems to be to include substantial distortions of history. I am cautiously supportive of puberty blockers, because the medical data on their risks are ambiguous—while the sociological data on how much happier trans kids are when accepted are totally unambiguous. I am well aware of the medical data saying that the risks of obesity are overblown (but also not negligible, particular for those who are very obese). Speaking as someone with a disability that causes me frequent, agonizing pain, yes, I want disabilities to be cured, thank you very much; accommodations are nice in the meantime, but the best long-term solution is to not need accommodations. (I’ll admit to some grey areas regarding certain neurodivergences such as autism and ADHD, and I would never want to force cures on people who don’t want them; but paralysis, deafness, blindness, diabetes, depression, and migraine are all absolutely worth finding cures for—the QALY at stake here are massive—and it’s silly to say otherwise.) I think abortion should generally be legal and readily available in the first trimester (which is when most abortions happen anyway), but much more strictly regulated thereafter—but denying it to children and rape victims is a human rights violation.

What I really want to talk about today is not the details of the moral belief, but the attitude toward those who don’t share it. There are genuine racists, transphobes, fatphobes, ableists, and misogynists in the world. There are also structural institutions that can lead to discrimination despite most of the people involved having no particular intention to discriminate. It’s worthwhile to talk about these things, and to try to find ways to fix them. But does calling anyone who disagrees with you a monster accomplish that goal?

This seems particularly bad precisely when your own beliefs are so cutting-edge. If you have a really basic, well-established sort of progressive belief like “hiring based on race should be illegal”, “women should be allowed to work outside the home” or “sodomy should be legal”, then people who disagree with you pretty much are bigots. But when you’re talking about new, controversial ideas, there is bound to be some lag; people who adopted the last generation’s—or even the last year’s—progressive beliefs may not yet be ready to accept the new beliefs, and that doesn’t make them bigots.

Consider this: Were you born believing in your current moral and political beliefs?

I contend that you were not. You may have been born intelligent, open-minded, and empathetic. You may have been born into a progressive, politically-savvy family. But the fact remains that any particular belief you hold about race, or gender, or ethics was something you had to learn. And if you learned it, that means that at some point you didn’t already know it. How would you have felt back then, if, instead of calmly explaining it to you, people called you names for not believing in it?

Now, perhaps it is true that as soon as you heard your current ideas, you immediately adopted them. But that may not be the case—it may have taken you some time to learn or change your mind—and even if it was, it’s still not fair to denigrate anyone who takes a bit longer to come around. There are many reasons why someone might not be willing to change their beliefs immediately, and most of them are not indicative of bigotry or deep moral failings.

It may be helpful to think about this in terms of updating your moral software. You were born with a very minimal moral operating system (emotions such as love and guilt, the capacity for empathy), and over time you have gradually installed more and more sophisticated software on top of that OS. If someone literally wasn’t born with the right OS—we call these people psychopaths—then, yes, you have every right to hate, fear, and denigrate them. But most of the people we’re talking about do have that underlying operating system, they just haven’t updated all their software to the same version as yours. It’s both unfair and counterproductive to treat them as irredeemably defective simply because they haven’t updated to the newest version yet. They have the hardware, they have the operating system; maybe their download is just a little slower than yours.

In fact, if you are very fast to adopt new, trendy moral beliefs, you may in fact be adopting them too quickly—they haven’t been properly vetted by human experience just yet. You can think of this as like a beta version: The newest update has some great new features, but it’s also buggy and unstable. It may need to be fixed before it is really ready for widespread release. If that’s the case, then people aren’t even wrong not to adopt them yet! It isn’t necessarily bad that you have adopted the new beliefs; we need beta testers. But you should be aware of your status as a beta tester and be prepared both to revise your own beliefs if needed, and also to cut other people slack if they disagree with you.

I understand that it can be immensely frustrating to be thoroughly convinced that something is true and important and yet see so many people disagreeing with it. (I am an atheist activist after all, so I absolutely know what that feels like.) I understand that it can be immensely painful to watch innocent people suffer because they have to live in a world where other people have harmful beliefs. But you aren’t changing anyone’s mind or saving anyone from harm by calling people names. Patience, tact, and persuasion will win the long game, and the long game is really all we have.

And if it makes you feel any better, the long game may not be as long as it seems. The arc of history may have tighter curvature than we imagine. We certainly managed a complete flip of the First World consensus on gay marriage in just a single generation. We may be able to achieve similarly fast social changes in other areas too. But we haven’t accomplished the progress we have so far by being uncharitable or aggressive toward those who disagree.

I am emphatically not saying you should stop arguing for your beliefs. We need you to argue for your beliefs. We need you to argue forcefully and passionately. But when doing so, try not to attack the people who don’t yet agree with you—for they are precisely the people we need to listen to you.

On (gay) marriage

Oct 9 JDN 2459862

This post goes live on my first wedding anniversary. Thus, as you read this, I will have been married for one full year.

Honestly, being married hasn’t felt that different to me. This is likely because we’d been dating since 2012 and lived together for several years before actually getting married. It has made some official paperwork more convenient, and I’ve reached the point where I feel naked without my wedding band; but for the most part our lives have not really changed.

And perhaps this is as it should be. Perhaps the best way to really know that you should get married is to already feel as though you are married, and just finally get around to making it official. Perhaps people for whom getting married is a momentous change in their lives (as opposed to simply a formal announcement followed by a celebration) are people who really shouldn’t be getting married just yet.

A lot of things in my life—my health, my career—have not gone very well in this past year. But my marriage has been only a source of stability and happiness. I wouldn’t say we never have conflict, but quite honestly I was expecting a lot more challenges and conflicts from the way I’d heard other people talk about marriage in the past. All of my friends who have kids seem to be going through a lot of struggles as a result of that (which is one of several reasons we keep procrastinating on looking into adoption), but marriage itself does not appear to be any more difficult than friendship—in fact, maybe easier.

I have found myself oddly struck by how un-important it has been that my marriage is to a same-sex partner. I keep expecting people to care—to seem uncomfortable, to be resistant, or simply to be surprised—and it so rarely happens.

I think this is probably generational: We Millennials grew up at the precise point in history when the First World suddenly decided, all at once, that gay marriage was okay.

Seriously, look at this graph. I’ve made it combining this article using data from the General Social Survey, and this article from Pew:

Until around 1990—when I was 2 years old—support for same-sex marriage was stable and extremely low: About 10% of Americans supported it (presumably most of them LGBT!), and over 70% opposed it. Then, quite suddenly, attitudes began changing, and by 2019, over 60% of Americans supported it and only 31% opposed it.

That is, within a generation, we went from a country where almost no one supported gay marriage to a country where same-sex marriage is so popular that any major candidate who opposed it would almost certainly lose a general election. (They might be able to survive a Republican primary, as Republican support for same-sex marriage is only about 44%—about where it was among Democrats in the early 2000s.)

This is a staggering rate of social change. If development economics is the study of what happened in South Korea from 1950-2000, I think political science should be the study of what happened to attitudes on same-sex marriage in the US from 1990-2020.

And of course it isn’t just the US. Similar patterns can be found across Western Europe, with astonishingly rapid shifts from near-universal opposition to near-universal support within a generation.

I don’t think I have been able to fully emotionally internalize this shift. I grew up in a world where homophobia was mainstream, where only the most radical left-wing candidates were serious about supporting equal rights and representation for LGBT people. And suddenly I find myself in a world where we are actually accepted and respected as equals, and I keep waiting for the other shoe to drop. Aren’t you the same people who told me as a teenager that I was a sexual deviant who deserved to burn in Hell? But now you’re attending my wedding? And offering me joint life insurance policies? My own extended family members treat me differently now than they did when I was a teenager, and I don’t quite know how to trust that the new way is the true way and not some kind of facade that could rapidly disappear.

I think this sort of generational trauma may never fully heal, in which case it will be the generation after us—the Zoomers, I believe we’re calling them now—who will actually live in this new world we created, while the rest of us forever struggle to accept that things are not as we remember them. Once bitten, we remain forever twice shy, lest attitudes regress as suddenly as they advanced.

Then again, it seems that Zoomers may be turning against the institution of marriage in general. As the meme says: “Boomers: No gay marriage. Millennials: Yes gay marriage. Gen Z: Yes gay, no marriage.” Maybe that’s for the best; maybe the future of humanity is for personal relationships to be considered no business of the government at all. But for now at least, equal marriage is clearly much better than unequal marriage, and the First World seems to have figured that out blazing fast.

And of course the rest of the world still hasn’t caught up. While trends are generally in a positive direction, there are large swaths of the world where even very basic rights for LGBT people are opposed by most of the population. As usual, #ScandinaviaIsBetter, with over 90% support for LGBT rights; and, as usual, Sub-Saharan Africa is awful, with support in Kenya, Uganda and Nigeria not even hitting 20%.

Working from home is the new normal—sort of

Aug 28 JDN 2459820

Among people with jobs that can be done remotely, a large majority did in fact switch to doing their jobs remotely: By the end of 2020, over 70% of Americans with jobs that could be done remotely were working from home—and most of them said they didn’t want to go back.

This is actually what a lot of employers expected to happen—just not quite like this. In 2014, a third of employers predicted that the majority of their workforce would be working remotely by 2020; given the timeframe there, it required a major shock to make that happen so fast, and yet a major shock was what we had.

Working from home has carried its own challenges, but overall productivity seems to be higher working remotely (that meeting really could have been an email!). This may actually explain why output per work hour actually rose rapidly in 2020 and fell in 2022.

The COVID pandemic now isn’t so much over as becoming permanent; COVID is now being treated as an endemic infection like influenza that we don’t expect to be able to eradicate in the foreseeable future.

And likewise, remote work seems to be here to stay—sort of.

First of all, we don’t seem to be giving up office work entirely. As of the first quarter 2022, almost as many firms have partially remote work as have fully remote work, and this seems to be trending upward. A lot of firms seem to be transitioning into a “hybrid” model where employees show up to work two or three days a week. This seems to be preferred by large majorities of both workers and firms.

There is a significant downside of this: It means that the hope that remote working might finally ease the upward pressure on housing prices in major cities is largely a false one. If we were transitioning to a fully remote system, then people could live wherever they want (or can afford) and there would be no reason to move to overpriced city centers. But if you have to show up to work even one day a week, that means you need to live close enough to the office to manage that commute.

Likewise, if workers never came to the office, you could sell the office building and convert it into more housing. But if they show up even once in awhile, you need a physical place for them to go. Some firms may shrink their office space (indeed, many have—and unlike this New York Times journalist, I have a really hard time feeling bad for landlords of office buildings); but they aren’t giving it up entirely. It’s possible that firms could start trading off—you get the building on Mondays, we get it on Tuesdays—but so far this seems to be rare, and it does raise a lot of legitimate logistical and security concerns. So our global problem of office buildings that are empty, wasted space most of the time is going to get worse, not better. Manhattan will still empty out every night; it just won’t fill up as much during the day. This is honestly a major drain on our entire civilization—building and maintaining all those structures that are only used at most 1/3 of 5/7 of the time, and soon, less—and we really should stop ignoring it. No wonder our real estate is so expensive, when half of it is only used 20% of the time!

Moreover, not everyone gets to work remotely. Your job must be something that can be done remotely—something that involves dealing with information, not physical objects. That includes a wide and ever-growing range of jobs, from artists and authors to engineers and software developers—but it doesn’t include everyone. It basically means what we call “white-collar” work.

Indeed, it is largely limited to the upper-middle class. The rich never really worked anyway, though sometimes they pretend to, convincing themselves that managing a stock portfolio (that would actually grow faster if they let it sit) constitutes “work”. And the working class? By and large, they didn’t get the chance to work remotely. While 73% of workers with salaries above $200,000 worked remotely in 2020, only 12% of workers with salaries under $25,000 did, and there is a smooth trend where, across the board, the more money you make, the more likely you have been able to work remotely.

This will only intensify the divide between white-collar and blue-collar workers. They already think we don’t do “real work”; now we don’t even go to work. And while blue-collar workers are constantly complaining about contempt from white-collar elites, I think the shoe is really on the other foot. I have met very few white-collar workers who express contempt for blue-collar workers—and I have met very few blue-collar workers who don’t express anger and resentment toward white-collar workers. I keep hearing blue-collar people say that we think that they are worthless and incompetent, when they are literally the only ones ever saying that. I can’t stop saying things that I never said.

The rich and powerful may look down on them, but they look down on everyone. (Maybe they look down on blue-collar workers more? I’m not even sure about that.) I think politicians sometimes express contempt for blue-collar workers, but I don’t think this reflects what most white-collar workers feel.

And the highly-educated may express some vague sense of pity or disappointment in people who didn’t get college degrees, and sometimes even anger (especially when they do things like vote for Donald Trump), but the really vitriolic hatred is clearly in the opposite direction (indeed, I have no better explanation for how otherwise-sane people could vote for Donald Trump). And I certainly wouldn’t say that everyone needs a college degree (though I became tempted to, when so many people without college degrees voted for Donald Trump).

This really isn’t us treating them with contempt: This is them having a really severe inferiority complex. And as information technology (that white-collar work created) gives us—but not them—the privilege of staying home, that is only going to get worse.

It’s not their fault: Our culture of meritocracy puts a little bit of inferiority complex in all of us. It tells us that success and failure are our own doing, and so billionaires deserve to have everything and the poor deserve to have nothing. And blue-collar workers have absolutely internalized these attitudes: Most of them believe that poor people choose to stay on welfare forever rather than get jobs (when welfare has time limits and work requirements, so this is simply not an option—and you would know this from the Wikipedia page on TANF).

I think that what they experience as “contempt by white-collar elites” is really the pain of living in an illusory meritocracy. They were told—and they came to believe—that working hard would bring success, and they have worked very hard, and watched other people be much more successful. They assume that the rich and powerful are white-collar workers, when really they are non-workers; they are people the world was handed to on a silver platter. (What, you think George W. Bush earned his admission to Yale?)

And thus, we can shout until we are blue in the face that plumbers, bricklayers and welders are the backbone of civilization—and they are, and I absolutely mean that; our civilization would, in an almost literal sense, collapse without them—but it won’t make any difference. They’ll still feel the pain of living in a society that gave them very little and tells them that people get what they deserve.

I don’t know what to say to such people, though. When your political attitudes are based on beliefs that are objectively false, that you could know are objectively false if you simply bothered to look them up… what exactly am I supposed to say to you? How can we have a useful political conversation when half the country doesn’t even believe in fact-checking?

Honestly I wish someone had explained to them that even the most ideal meritocratic capitalism wouldn’t reward hard work. Work is a cost, not a benefit, and the whole point of technological advancement is to allow us to accomplish more with less work. The ideal capitalism would reward talent—you would succeed by accomplishing things, regardless of how much effort you put into them. People would be rich mainly because they are brilliant, not because they are hard-working. The closest thing we have to ideal capitalism right now is probably professional sports. And no amount of effort could ever possibly make me into Steph Curry.

If that isn’t the world we want to live in, so be it; let’s do something else. I did nothing to earn either my high IQ or my chronic migraines, so it really does feel unfair that the former increases my income while the latter decreases it. But the labor theory of value has always been wrong; taking more sweat or more hours to do the same thing is worse, not better. The dignity of labor consists in its accomplishment, not its effort. Sisyphus is not happy, because his work is pointless.

Honestly at this point I think our best bet is just to replace all blue-collar work with automation, thus rendering it all moot. And then maybe we can all work remotely, just pushing code patches to the robots that do everything. (And no doubt this will prove my “contempt”: I want to replace you! No, I want to replace the grueling work that you have been forced to do to make a living. I want you—the human being—to be able to do something more fun with your life, even if that’s just watching television and hanging out with friends.)

Good news on the climate, for a change

Aug 7 JDN 2459799

In what is surely the biggest political surprise of the decade—if not the century—Joe Manchin suddenly changed his mind and signed onto a budget reconciliation bill that will radically shift US climate policy. He was the last vote needed for the bill to make it through the Senate via reconciliation (as he often is, because he’s pretty much a DINO).

Because the Senate is ridiculous, there are still several layers of procedure the bill must go through before it can actually pass. But since the parliamentarian was appointed by a Democrat and the House had already passed an even stronger climate bill, it looks like at least most of it will make it through. The reconciliation process means we only need a bare majority, so even if all the Republicans vote against it—which they very likely will—it can still get through, with Vice President Harris’s tiebreaking vote. (Because our Senate is 50-50, Harris is on track to cast the most tie-breaking votes of any US Vice President by the end of her term.) Reconciliation also can’t be filibustered.

While it includes a lot of expenditures, particularly tax credits for clean energy and electric cars, the bill includes tax increases and closed loopholes so that it will actually decrease the deficit and likely reduce inflation—which Manchin said was a major reason he was willing to support it. But more importantly, it promises to reduce US carbon emissions by a staggering 40% by 2030.

The US currently produces about 15 tons of CO2 equivalent per person per year, so reducing that by 40% would drop it to only 9 tons per person per year. This would move us from nearly as bad as Saudi Arabia to nearly as good as Norway. It still won’t mean we are doing as well as France or the UK—but at least we’ll no longer be dragging down the rest of the First World.

And this isn’t a pie-in-the-sky promise: Independent forecasts suggest that these policies may really be able to reduce our emissions that much that fast. It’s honestly a little hard for me to believe; but that’s what the experts are saying.

Manchin wants to call it the Inflation Reduction Act, but it probably won’t actually reduce inflation very much. But some economists—even quite center-right ones—think it may actually reduce inflation quite a bit, and we basically all agree that it at least won’t increase inflation very much. Since the effects on inflation are likely to be small, we really don’t have to worry about them: whatever it does to inflation, the important thing is that this bill reduces carbon emissions.

Honestly, it’ll be kind of disgusting if this actually does work—because it’s so easy. This bill will have almost no downside. Its macroeconomic effects will be minor, maybe even positive. There was no reason it needed to be this hard-fought. Even if it didn’t have tax increases to offset it—which it absolutely does—the total cost of this bill over the next ten years would be less than six months of military spending, so cutting military spending by 5% would cover it. We have cured our unbearable headaches by finally realizing we could stop hitting ourselves in the head. (And the Republicans want us to keep hitting ourselves and will do whatever they can to make that happen.)

So, yes, it’s very sad that it took us this long. And even 60% of our current emissions is still too much emissions for a stable climate. But let’s take a moment to celebrate, because this is a genuine victory—and we haven’t had a lot of those in awhile.

On the Overton Window

Jul 24 JDN 2459786

As you are no doubt aware, a lot of people on the Internet like to loudly proclaim support for really crazy, extreme ideas. Some of these people actually believe in those ideas, and if you challenge them, will do their best to defend them. Those people are wrong at the level of substantive policy, but there’s nothing wrong with their general approach: If you really think that anarchism or communism is a good thing, it only makes sense that you’d try to convince other people. You might have a hard time of it (in part because you are clearly wrong), but it makes sense that you’d try.

But there is another class of people who argue for crazy, extreme ideas. When pressed, they will admit they don’t really believe in abolishing the police or collectivizing all wealth, but they believe in something else that’s sort of vaguely in that direction, and they think that advocating for the extreme idea will make people more likely to accept what they actually want.

They often refer to this as “shifting the Overton Window”. As Matt Yglesias explained quite well a year ago, this is not actually what Overton was talking about.

But, in principle, it could still be a thing that works. There is a cognitive bias known as anchoring which is often used in marketing: If I only offered a $5 bottle of wine and a $20 bottle of wine, you might think the $20 bottle is too expensive. But if I also include a $50 bottle, that makes you adjust your perceptions of what constitutes a “reasonable” price for wine, and may make you more likely to buy the $20 bottle after all.

It could be, therefore, that an extreme policy demand makes people more willing to accept moderate views, as a sort of compromise. Maybe demanding the abolition of police is a way of making other kinds of police reform seem more reasonable. Maybe showing pictures of Marx and chanting “eat the rich” could make people more willing to accept higher capital gains taxes. Maybe declaring that we are on the verge of apocalyptic climate disaster will make people more willing to accept tighter regulations on carbon emissions and subsidies for solar energy.

Then again—does it actually seem to do that? I see very little evidence that it does. All those demands for police abolition haven’t changed the fact that defunding the police is unpopular. Raising taxes on the rich is popular, but it has been for awhile now (and never was with, well, the rich). And decades of constantly shouting about imminent climate catastrophe is really starting to look like crying wolf.

To see why this strategy seems to be failing, I think it’s helpful to consider how it feels from the other side. Take a look at some issues where someone else is trying to get you to accept a particular view, and consider whether someone advocating a more extreme view would make you more likely to compromise.

Your particular opinions may vary, but here are some examples that would apply to me, and, I suspect, many of you.

If someone says they want tighter border security, I’m skeptical—it’s pretty tight already. But in and of itself, this would not be such a crazy idea. Certainly I agree that it is possible to have too little border security, and so maybe that turns out to be the state we’re in.

But then, suppose that same person, or someone closely allied to them, starts demanding the immediate deportation of everyone who was not born in the United States, even those who immigrated legally and are naturalized or here on green cards. This is a crazy, extreme idea that’s further in the same direction, so on this anchoring theory, it should make me more willing to accept the idea of tighter border security. And yet, I can say with some confidence that it has no such effect.

Indeed, if anything I think it would make me less likely to accept tighter border security, in proportion to how closely aligned those two arguments are. If they are coming from the same person, or the same political party, it would cause me to suspect that the crazy, extreme policy is the true objective, and the milder, compromise policy is just a means toward that end. It also suggests certain beliefs and attitudes about immigration in general—xenophobia, racism, ultranationalism—that I oppose even more strongly. If you’re talking about deporting all immigrants, you make me suspect that your reasons for wanting tighter border security are not good ones.

Let’s try another example. Suppose someone wants to cut taxes on upper income brackets. In our current state, I think that would be a bad idea. But there was a time not so long ago when I would have agreed with it: Even I have to admit that a top bracket of 94% (as we had in 1943) sounds a little ridiculous, and is surely on the wrong side of the Laffer curve. So the basic idea of cutting top tax rates is not inherently crazy or ridiculous.

Now, suppose that same idea came from the same person, or the same party, or the same political movement, as one that was arguing for the total abolition of all taxation. This is a crazy, extreme idea; it would amount to either total anarcho-capitalism with no government at all, or some sort of bizarre system where the government is funded entirely through voluntary contributions. I think it’s pretty obvious that such a system would be terrible, if not outright impossible; and anyone whose understanding of political economy is sufficiently poor that they would fail to see this is someone whose overall judgment on questions of policy I must consider dubious. Once again, the presence of the extreme view does nothing to make me want to consider the moderate view, and may even make me less willing to do so.

Perhaps I am an unusually rational person, not so greatly affected by anchoring biases? Perhaps. But whereas I do feel briefly tempted by to buy the $20 wine bottle by the effect of the $50 wine bottle, and must correct myself with knowledge I have about anchoring bias, the presentation of an extreme political view never even makes me feel any temptation to accept some kind of compromise with it. Learning that someone supports something crazy or ridiculous—or is willing to say they do, even if deep down they don’t—makes me automatically lower my assessment of their overall credibility. If anything, I think I am tempted to overreact in that direction, and have to remind myself of the Stopped Clock Principle: reversed stupidity is not intelligence, and someone can have both bad ideas and good ones.

Moreover, the empirical data, while sketchy, doesn’t seem to support this either; where the Overton Window (in the originally intended sense) has shifted, as on LGBT rights, it was because people convincingly argued that the “extreme” position was in fact an entirely reasonable and correct view. There was a time not so long ago that same-sex marriage was deemed unthinkable, and the “moderate” view was merely decriminalizing sodomy; but we demanded, and got, same-sex marriage, not as a strategy to compromise on decriminalizing sodomy, but because we actually wanted same-sex marriage and had good arguments for it. I highly doubt we would have been any more successful if we had demanded something ridiculous and extreme, like banning opposite-sex marriage.

The resulting conclusion seems obvious and banal: Only argue for things you actually believe in.

Yet, somehow, that seems to be a controversial view these days.

How to pack the court

Jul 10 JDN 2459790

By now you have no doubt heard the news that Roe v. Wade was overturned. The New York Times has an annotated version of the full opinion.

My own views on abortion are like those of about 2/3 of Americans: More nuanced than can be neatly expressed by ‘pro-choice’ or ‘pro-life’, much more comfortable with first-trimester abortion (which is what 90% of abortions are, by the way) than later, and opposed to overturning Roe v. Wade in its entirety. I also find great appeal in Clinton’s motto on the issue: “safe, legal, and rare”.Several years ago I moderated an online discussion group that reached what we called the Twelve Week Compromise: Abortion would be legal for any reason up to 12 weeks of pregnancy, after which it would only be legal for extenuating circumstances including rape, incest, fetal nonviability, and severe health risk to the mother. This would render the vast majority of abortions legal without simply saying that it should be permitted without question. Roe v. Wade was actually slightly more permissive than this, but it was itself a very sound compromise.

But even if you didn’t like Roe v. Wade, you should be outraged at the manner in which it was overturned. If the Supreme Court can simply change its mind on rights that have been established for nearly 50 years, then none of our rights are safe. And in chilling comments, Clarence Thomas has declared that this is his precise intention: “In future cases, we should reconsider all of this Court’s substantive due process precedents, including Griswold, Lawrence, and Obergefell.” That is to say, Thomas wants to remove our rights to use contraception and have same-sex relationships. (If Lawrence were overturned, sodomy could be criminalized in several states!)

The good news here is that even the other conservative justices seem much less inclined to overturn these other precedents. Kavanaugh’s concurrent opinion explicitly states he has no intention of overturning “Griswold v. Connecticut, 381 U. S. 479 (1965); Eisenstadt v. Baird, 405 U. S. 438 (1972); Loving v. Virginia, 388 U. S. 1 (1967); and Obergefell v. Hodges, 576 U. S. 644 (2015)”. It seems quite notable that Thomas did not mention Loving v. Virginia, seeing as it was made around the same time as Roe v. Wade, based on very similar principles—and it affects him personally. And even if these precedents are unlikely to be overturned immediately, this ruling shows that the security of all of our rights can depend on the particular inclinations of individual justices.

The Supreme Court is honestly a terrible institution. Courts should not be more powerful than legislatures, lifetime appointments reek of monarchism, and the claim of being ‘apolitical’ that was dubious from the start is now obviously ludicrous. But precisely because it is so powerful, reforming it will be extremely difficult.

The first step is to pack the court. The question is no longer whether we should pack the court, but how, and why we didn’t do it sooner.

What does it mean to pack the court? Increase the number of justices, appointing new ones who are better than the current ones. (Since almost any randomly-selected American would be better than Clarence Thomas, Samuel Alito, or Brent Kavanaugh, this wouldn’t be hard.) This is 100% Constitutional, as the Constitution does not in any way restrict the number of justices. It can simply be done by an act of Congress.

But of course we can’t stop there. President Biden could appoint four more justices, and then whoever comes after him could appoint another three, and before we know it the Supreme Court has twenty-seven justices and each new President is expected to add a few more.

No, we need to fix the number of justices so that it can’t be increased any further. Ideally this would be done by Constitutional Amendment, though the odds of getting such a thing passed seem rather slim. But there is in fact a sensible way to add new justices now and then justify not adding any more later, and that is to tie justices to federal circuits.

There are currently 13 US federal circuit courts. If we added 4 more Supreme Court justices, there would be 13 Supreme Court justices. Each could even be assigned to be the nominal head of that federal circuit, and responsible for being the first to read appeals coming from that circuit.

Which justice goes where? Well, what if we let the circuits themselves choose? The selection could be made by a popular vote among the people who live there. Make the federal circuit a federal popular vote. The justice responsible for the federal circuit can also be the Chief Justice.

That would also require a Constitutional Amendment, but it would, at a stroke, fundamentally reform what the Supreme Court is and how its justices are chosen. For now, we could simply add three new justices, making the current number 13. Then they could decide amongst themselves who will get what circuit until we implement the full system to let circuits choose their justices.

I’m well aware that electing judges is problematic—but at this point I don’t think we have a choice. (I would also prefer to re-arrange the circuits: it’s weird that DC gets its own circuit instead of being part of circuit 4, and circuit 9 has way more people than circuit 1.) We can’t simply trust each new President to appoint a new justice whenever one happens to retire or die and then leave that justice in place for decades to come. Not in a world where someone like Donald Trump can be elected President.

A lot of centrist people are uncomfortable with such a move, seeing it as ‘playing dirty’. But it’s not. It’s playing hardball—taking seriously the threat that the current Republican Party poses to the future of American government and society, and taking substantive steps to fight that threat. (After its authoritarian shift that started in the mid 2000s but really took off under Trump, the Republican Party now has more in common with far-right extremist parties like Fidesz in Hungary than with mainstream center-right parties like the Tories.) But there is absolutely nothing un-Constitutional about this plan. It’s doing everything possible within the law.

We should have done this before they started overturning landmark precedents. But it’s not too late to do it before they overturn any more.

If I had a trillion dollars…

May 29 JDN 2459729

(To the tune of “If I had a million dollars” by Barenaked Ladies; by the way, he does now)

[Inspired by the book How to Spend a Trillion Dollars]

If I had a trillion dollars… if I had a trillion dollars!

I’d buy everyone a house—and yes, I mean, every homeless American.

[500,000 homeless households * $300,000 median home price = $150 billion]

If I had a trillion dollars… if I had a trillion dollars!

I’d give to the extreme poor—and then there would be no extreme poor!

[Global poverty gap: $160 billion]

If I had a trillion dollars… if I had a trillion dollars!

I’d send people to Mars—hey, maybe we’d find some alien life!

[Estimated cost of manned Mars mission: $100 billion]

If I had a trillion dollars… if I had a trillion dollars!

I’d build us a Moon base—haven’t you always wanted a Moon base?

[Estimated cost of a permanent Lunar base: $35 billion. NASA is bad at forecasting cost, so let’s allow cost overruns to take us to $100 billion.]

If I had a trillion dollars… if I had a trillion dollars!

I’d build a new particle accelerator—let’s finally figure out dark matter!

[Cost of planned new accelerator at CERN: $24 billion. Let’s do 4 times bigger and make it $100 billion.]

If I had a trillion dollars… if I had a trillion dollars!

I’d save the Amazon—pay all the ranchers to do something else!

[Brazil, where 90% of Amazon cattle ranching is, produces about 10 million tons of beef per year, which at an average price of $5000 per ton is $50 billion. So I could pay all the farmers two years of revenue to protect the Amazon instead of destroying it for $100 billion.]

If I had a trillion dollars…

We wouldn’t have to drive anymore!

If I had a trillion dollars…

We’d build high-speed rail—it won’t cost more!

[Cost of proposed high-speed rail system: $240 billion]

If I had a trillion dollars… if I had trillion dollars!

Hey wait, I could get it from a carbon tax!

[Even a moderate carbon tax could raise $1 trillion in 10 years.]

If I had a trillion dollars… I’d save the world….

All of the above really could be done for under $1 trillion. (Some of them would need to be repeated, so we could call it $1 trillion per year.)

I, of course, do not, and will almost certainly never have, anything approaching $1 trillion.

But here’s the thing: There are people who do.

Elon Musk and Jeff Bezos together have a staggering $350 billion. That’s two people with enough money to end world hunger. And don’t give me that old excuse that it’s not in cash: UNICEF gladly accepts donations in stock. They could, right now, give their stocks to UNICEF and thereby end world hunger. They are choosing not to do that. In fact, the goodwill generated by giving, say, half their stocks to UNICEF might actually result in enough people buying into their companies that their stock prices would rise enough to make up the difference—thus costing them literally nothing.

The total net wealth of all the world’s billionaires is a mind-boggling $12.7 trillion. That’s more than half a year of US GDP. Held by just over 2600 people—a small town.

The US government spends $4 trillion in a normal year—and $5 trillion the last couple of years due to the pandemic. Nearly $1 trillion of that is military spending, which could be cut in half and still be the highest in the world. After seeing how pathetic Russia’s army actually is in battle (they paint Zs on their tanks because apparently their IFF system is useless!), are we really still scared of them? Do we really need eleven carrier battle groups?

Yes, the total cost of mitigating climate change is probably in the tens of trillions—but the cost of not mitigating climate change could be over $100 trillion. And it’s not as if the world can’t come up with tens of trillions; we already do. World GDP is now over $100 trillion per year; just 2% of that for 10 years is $20 trillion.

Do these sound like good ideas to you? Would you want to do them? I think most people would want most of them. So now the question becomes: Why aren’t we doing them?

Maybe we should forgive student debt after all.

May 8 JDN 2459708

President Biden has been promising some form of student debt relief since the start of his campaign, though so far all he has actually implemented is a series of no-interest deferments and some improvements to the existing forgiveness programs. (This is still significant—it has definitely helped a lot of people with cashflow during the pandemic.) Actual forgiveness for a large segment of the population remains elusive, and if it does happen, it’s unclear how extensive it will be in either intensity (amount forgiven) or scope (who is eligible).

I personally had been fine with this; while I have a substantial loan balance myself, I also have a PhD in economics, which—theoretically—should at some point entitle me to sufficient income to repay those loans.

Moreover, until recently I had been one of the few left-wing people I know to not be terribly enthusiastic about loan forgiveness. It struck me as a poor use of those government funds, because $1.75 trillion is an awful lot of money, and college graduates are a relatively privileged population. (And yes, it is valid to consider this a question of “spending”, because the US government is the least liquidity-constrained entity on Earth. In lieu of forgiving $1.75 trillion in debt, they could borrow $1.75 trillion in debt and use it to pay for whatever they want, and their ultimate budget balance would be basically the same in each case.)

But I say all this in the past tense because Krugman’s recent column has caused me to reconsider. He gives two strong reasons why debt forgiveness may actually be a good idea.

The first is that Congress is useless. Thanks to gerrymandering and the 40% or so of our population who keeps electing Republicans no matter how crazy they get, it’s all but impossible to pass useful legislation. The pandemic relief programs were the exception that proves the rule: Somehow those managed to get through, even though in any other context it’s clear that Congress would never have approved any kind of (non-military) program that spent that much money or helped that many poor people.

Student loans are the purview of the Department of Education, which is entirely under control of the Executive Branch, and therefore, ultimately, the President of the United States. So Biden could forgive student loans by executive order and there’s very little Congress could do to stop him. Even if that $1.75 trillion could be better spent, if it wasn’t going to be anyway, we may as well use it for this.

The second is that “college graduates” is too broad a category. Usually I’m on guard for this sort of thing, but in this case I faltered, and did not notice the fallacy of composition so many labor economists were making by lumping all college grads into the same economic category. Yes, some of us are doing well, but many are not. Within-group inequality matters.

A key insight here comes from carefully analyzing the college wage premium, which is the median income of college graduates, divided by the median income of high school graduates. This is an estimate of the overall value of a college education. It’s pretty large, as a matter of fact: It amounts to something like a doubling of your income, or about $1 million over one’s whole lifespan.

From about 1980-2000, wage inequality grew about as fast as today, and the college wage premium grew even faster. So it was plausible—if not necessarily correct—to believe that the wage inequality reflected the higher income and higher productivity of college grads. But since 2000, wage inequality has continued to grow, while the college wage premium has been utterly stagnant. Thus, higher inequality can no longer (if it ever could) be explained by the effects of college education.

Now some college graduates are definitely making a lot more money—such as those who went into finance. But it turns out that most are not. As Krugman points out, the 95th percentile of male college grads has seen a 25% increase in real (inflation-adjusted) income in the last 20 years, while the median male college grad has actually seen a slight decrease. (I’m not sure why Krugman restricted to males, so I’m curious how it looks if you include women. But probably not radically different?)

I still don’t think student loan forgiveness would be the best use of that (enormous sum of) money. But if it’s what’s politically feasible, it definitely could help a lot of people. And it would be easy enough to make it more progressive, by phasing out forgiveness for graduates with higher incomes.

And hey, it would certainly help me, so maybe I shouldn’t argue too strongly against it?