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?

Centrism is dying in America.

Apr 24 JDN 2459694

Four years ago—back when (shudder) Trump was President—I wrote a post about the true meaning of centrism, the kind of centrism worth defending.

I think it’s worth repeating now: Centrism isn’t saying “both sides are the same” when they aren’t. It’s recognizing that the norms of democracy themselves are worth defending—and more worth defending than almost any specific policy goal.

I wanted to say any specific policy goal, but I do think you can construct extreme counterexamples, like “establish a 100% tax on all income” (causing an immediate, total economic collapse), or “start a war with France” (our staunchest ally for the past 250 years who also has nuclear weapons). But barring anything that extreme, just about any policy is less important than defending democracy itself.

Or at least I think so. It seems that most Americans disagree. On both the left and the right—but especially on the right—a large majority of American voters are still willing to vote for a candidate who flouts basic democratic norms as long as they promise the right policies.

I guess on the right this fact should have been obvious: Trump. But things aren’t much better on the left, and should some actual radical authoritarian communist run for office (as opposed to, you know, literally every left-wing politician who is accused of being a radical authoritarian communist), this suggests that a lot of leftist voters might actually vote for them, which is nearly as terrifying.

My hope today is that I might tip the balance a little bit the other direction, remind people why democracy is worth defending, even at the cost of our preferred healthcare systems and marginal tax rates.

This is, above all, that democracy is self-correcting. If a bad policy gets put in place while democratic norms are still strong, then that policy can be removed and replaced with something better later on. Authoritarianism lacks this self-correction mechanism; get someone terrible in power and they stay in power, doing basically whatever they want, unless they are violently overthrown.

For the right wing, that’s basically it. You need to stop making excuses for authoritarianism. Basically none of your policies are so important that they would justify even moderate violations of democratic norms—much less than Trump already committed, let alone what he might do if re-elected and unleashed. I don’t care how economically efficient lower taxes or privatized healthcare might be (and I know that there are in fact many economists who would agree with you on that, though I don’t), it isn’t worth undermining democracy. And while I do understand why you consider abortion to be such a vital issue, you really need to ask yourself whether banning abortion is worth living under a fascist government, because that’s the direction you’re headed. Let me note that banning abortion doesn’t even seem to reduce it very much, so there’s that. While the claim that abortion bans do nothing is false, even a total overturn of Roe v. Wade would most likely reduce US abortions by about 15%—much less than the 25% decrease between 2008 and 2014, which was also part of a long-term trend of decreasing abortion rates which are now roughly half what they were in 1980. We don’t need to ban abortion in order to reduce it—and indeed many of the things that work are things like free healthcare and easy access to contraception that right-wing governments typically resist. So even if you consider abortion to be a human rights violation, which I know many of you do, is that relatively small reduction in abortion rates worth risking the slide into fascism?

But for the left wing, things are actually a bit more complicated. Some right-wing policies—particularly social policies—are inherently anti-democratic and violations of human rights. I gave abortion the benefit of the doubt above; I can at least see why someone would think it’s a human rights violation (though I do not). Here I’m thinking particularly of immigration policies that lock up children at the border and laws that actively discriminate against LGBT people. I can understand why people would be unwilling to “hold their nose” and vote for someone who wants to enact that kind of policy—though if it’s really the only way to avoid authoritarianism, I think we might still have to do it. Democracy is too high a price to pay; give it up now and there is nothing to stop that new authoritarian leftist government from turning into a terrible nightmare (that may not even remain leftist, by the way!). If we vote in someone who is pro-democratic but otherwise willing to commit these sorts of human rights violations, hopefully we can change things by civic engagement or vote them out of office later on (and over the long run, we do, in fact, have a track record of doing that). But if we vote in someone who will tear apart democracy even when they seem to have the high ground on human rights, then once democracy is undermined, the new authoritarian government can oppress us in all sorts of ways (even ways they specifically promised not to!), and we will have very little recourse.

Above all, even if they promise to give us everything we want, once you put an authoritarian in power, they can do whatever they want. They have no reason to keep their promises (whereas, contrary to popular belief, democratic politicians actually typically do), for we have no recourse if they don’t. Our only option to remove them from power is violent revolution—which usually fails, and even if it succeeds, would have an enormous cost in human lives.

Why is this a minority view? Why don’t more Americans agree with this?

I can think of a few possible reasons.

One is that they may not believe that these violations of democratic norms are really all that severe or worrisome. Overriding a judge with an executive order isn’t such a big deal, is it? Gerrymandering has been going on for decades, why should we worry about it now?

If that is indeed your view, let me remind you that in January 2021, armed insurrectionists stormed the Capitol building. That is not something we can just take lying down. This is a direct attack upon the foundations of democracy, and while it failed (miserably, and to be honest, hilariously), it wasn’t punished nearly severely enough—most of the people involved were not arrested on any charges, and several are now running for office. This lack of punishment means that it could very well happen again, and this time be better organized and more successful.

A second possibility is that people do not know that democracy is being undermined; they are somehow unaware that this is happening. If that’s the case, all I can tell you is that you really need to go to the Associated Press or New York Times website and read some news. You would have to be catastrophically ignorant of our political situation, and you frankly don’t deserve to be voting if that is the case.

But I suspect that for most people, a third reason applies: They see that democracy is being undermined, but they blame the other side. We aren’t the ones doing it—it’s them.

Such a view is tempting, at least from the left side of the aisle. No Democratic Party politician can hold a candle to Trump as far as authoritarianism (or narcissism). But we should still be cognizant of ways that our actions may also undermine democratic norms: Maybe we shouldn’t be considering packing the Supreme Court, unless we can figure out a way to ensure that it will genuinely lead to a more democratic and fair court long into the future. (For the latter sort of reform, suppose each federal district elected its own justice? Or we set up a mandatory retirement cycle such that every President would always appoint at least one justice?)

But for those of you on the right… How can you possibly think this? Where do you get your information from? How can you look at Donald Trump and think, “This man will defend our democracy from those left-wing radicals”? Right now you may be thinking, “oh, look, he suggested the New York Times; see his liberal bias”; that is a newspaper of record in the United States. While their editors are a bit left of center, they are held to the highest standards of factual accuracy. But okay, if you prefer the Wall Street Journal (also a newspaper of record, but whose editors are a bit more right of center), be my guest; their factual claims won’t disagree, because truth is truth. I also suggested the Associated Press, widely regarded worldwide as one of the most credible news sources. (I considered adding Al Jazeera, which has a similar reputation, but figured you wouldn’t go for that.)

If you think that the attack on the Capitol was even remotely acceptable, you must think that their claims of a stolen election were valid, or at least plausible. But every credible major news source, the US Justice Department, and dozens of law courts agree that they were not. Any large election is going to have a few cases of fraud, but there were literally only hundreds of fradulent votes—in an election in which over 150 million votes were cast, Biden won the popular vote by over 7 million votes, and no state was won by less than 10,000 votes. This means that 99.999% of votes were valid, and even if every single fradulent vote had been for Biden and in Georgia (obviously not the case), it wouldn’t have been enough to tip even that state.

I’m not going to say that left-wing politicians never try to undermine democratic norms—there’s certainly plenty of gerrymandering, and I just said, court-packing is at least problematic. Nor would I say that the right wing is always worse about this. But it should be pretty obvious to anyone with access to basic factual information—read: everyone with Internet access—that right now, the problem is much worse on the right. You on the right need to face up to that fact, and start voting out Republicans who refuse to uphold democracy, even if it means you have to wait a bit longer for lower taxes or more (let me remind you, not very effective) abortion bans.

In the long run, I would of course like to see changes in the whole political system, so that we are no longer dominated by two parties and have a wider variety of realistic options. (The best way to do that would of couse be range voting.) But for now, let’s start by ensuring that democracy continues to exist in America.

Russia has invaded Ukraine.

Mar 6 JDN 2459645

Russia has invaded Ukraine. No doubt you have heard it by now, as it’s all over the news now in dozens of outlets, from CNN to NBC to The Guardian to Al-Jazeera. And as well it should be, as this is the first time in history that a nuclear power has annexed another country. Yes, nuclear powers have fought wars before—the US just got out of one in Afghanistan as you may recall. They have even started wars and led invasions—the US did that in Iraq. And certainly, countries have been annexing and conquering other countries for millennia. But never before—never before, in human historyhas a nuclear-armed state invaded another country simply to claim it as part of itself. (Trump said he thought the US should have done something like that, and the world was rightly horrified.)

Ukraine is not a nuclear power—not anymore. The Soviet Union built up a great deal of its nuclear production in Ukraine, and in 1991 when Ukraine became independent it still had a sizable nuclear arsenal. But starting in 1994 Ukraine began disarming that arsenal, and now it is gone. Now that Russia has invaded them, the government of Ukraine has begun publicly reconsidering their agreements to disarm their nuclear arsenal.

Russia’s invasion of Ukraine has just disproved the most optimistic models of international relations, which basically said that major power wars for territory were over at the end of WW2. Some thought it was nuclear weapons, others the United Nations, still others a general improvement in trade integration and living standards around the world. But they’ve all turned out to be wrong; maybe such wars are rarer, but they can clearly still happen, because one just did.

I would say that only two major theories of the Long Peace are still left standing in light of this invasion, and that is nuclear deterrence and the democratic peace. Ukraine gave up its nuclear arsenal and later got attacked—that’s consistent with nuclear deterrence. Russia under Putin is nearly as authoritarian as the Soviet Union, and Ukraine is a “hybrid regime” (let’s call it a solid D), so there’s no reason the democratic peace would stop this invasion. But any model which posits that trade or the UN prevent war is pretty much off the table now, as Ukraine had very extensive trade with both Russia and the EU and the UN has been utterly toothless so far. (Maybe we could say the UN prevents wars except those led by permanent Security Council members.)

Well, then, what if the nuclear deterrence theory is right? What would have happened if Ukraine had kept its nuclear weapons? Would that have made this situation better, or worse? It could have made it better, if it acted as a deterrent against Russian aggression. But it could also have made it much, much worse, if it resulted in a nuclear exchange between Russia and Ukraine.

This is the problem with nukes. They are not a guarantee of safety. They are a guarantee of fat tails. To explain what I mean by that, let’s take a brief detour into statistics.

A fat-tailed distribution is one for which very extreme events have non-negligible probability. For some distributions, like a uniform distribution, events are clearly contained within a certain interval and nothing outside is even possible. For others, like a normal distribution or lognormal distribution, extreme events are theoretically possible, but so vanishingly improbable they aren’t worth worrying about. But for fat-tailed distributions like a Cauchy distribution or a Pareto distribution, extreme events are not so improbable. They may be unlikely, but they are not so unlikely they can simply be ignored. Indeed, they can actually dominate the average—most of what happens, happens in a handful of extreme events.

Deaths in war seem to be fat-tailed, even in conventional warfare. They seem to follow a Pareto distribution. There are lots of tiny skirmishes, relatively frequent regional conflicts, occasional major wars, and a handful of super-deadly global wars. This kind of pattern tends to emerge when a phenomenon is self-reinforcing by positive feedback—hence why we also see it in distributions of income and wildfire intensity.

Fat-tailed distributions typically (though not always—it’s easy to construct counterexamples, like the Cauchy distribution with low values truncated off) have another property as well, which is that minor events are common. More common, in fact, than they would be under a normal distribution. What seems to happen is that the probability mass moves away from the moderate outcomes and shifts to both the extreme outcomes and the minor ones.

Nuclear weapons fit this pattern perfectly. They may in fact reduce the probability of moderate, regional conflicts, in favor of increasing the probability of tiny skirmishes or peaceful negotiations. But they also increase the probability of utterly catastrophic outcomes—a full-scale nuclear war could kill billions of people. It probably wouldn’t wipe out all of humanity, and more recent analyses suggest that a catastrophic “nuclear winter” is unlikely. But even 2 billion people dead would be literally the worst thing that has ever happened, and nukes could make it happen in hours when such a death toll by conventional weapons would take years.

If we could somehow guarantee that such an outcome would never occur, then the lower rate of moderate conflicts nuclear weapons provide would justify their existence. But we can’t. It hasn’t happened yet, but it doesn’t have to happen often to be terrible. Really, just once would be bad enough.

Let us hope, then, that the democratic peace turns out to be the theory that’s right. Because a more democratic world would clearly be better—while a more nuclearized world could be better, but could also be much, much worse.

Basic income reconsidered

Feb 20 JDN 2459631

In several previous posts I have sung the praises of universal basic income (though I have also tried to acknowledge the challenges involved).

In this post I’d like to take a step back and reconsider the question of whether basic income is really the best approach after all. One nagging thought keeps coming back to me, and it is the fact that basic income is extremely expensive.

About 11% of the US population lives below the standard poverty line. There are many criticisms of the standard poverty line: Some say it’s too high, because you can compare it favorably with middle-class incomes in much poorer countries. Others say it’s too low, because income at that level doesn’t allow people to really live in financial security. There are many difficult judgment calls that go into devising a poverty threshold, and we can reasonably debate whether the right ones were made here.

However, I think this threshold is at least approximately correct; maybe the true poverty threshold for a household of 1 should be not $12,880 but $11,000 or $15,000, but I don’t think it should be $5,000 or $25,000. Maybe for a household of 4 it should be not $26,500 but $19,000 or $32,000; but I don’t think it should be $12,000 or $40,000.

So let’s suppose that we wanted to implement a universal basic income in the United States that would lift everyone out of poverty. We could essentially do that by taking the 2-person-household threshold of $17,420 and dividing it by 2, yielding $8,710 per person per year. (Why not use the 1-person-household threshold? There aren’t very many 1-person households in poverty, and that threshold would be considerably higher and thus considerably more expensive. A typical poor household is a single parent and one or more children; as long as kids get the basic income, that household would be above the threshold in this system.)

The US population is currently about 331 million people. If every single one of them were to receive a basic income of $8,710, that would cost nearly $2.9 trillion per year. This is a feasible amount—it’s less than half the current total federal budget—but it is still a very large amount. The tax increases required to support it would be massive, and that’s probably why, despite ostensibly bipartisan support for the idea of a basic income, no serious proposal has ever gotten off of the ground.

If on the other hand we were to only give the basic income to people below the poverty line, that would cost only 11% of that amount: A far more manageable $320 billion per year.

We don’t want to do exactly that, however, because it would create all kinds of harmful distortions in the economy. Consider someone who is just below the threshold, considering whether to take on more work or get a higher-paying job. If their household pre-tax income is currently $15,000 and they could raise it to $18,000, a basic income given only to people below the threshold would mean that they are choosing between $15,000+$17,000=$32,000 if they keep their current work and $18,000 if they increase it. Clearly, they would not want to take on more work. That’s a terrible system—it amounts to a marginal tax rate above 100%.

Another possible method would be to simply top off people’s income, give them whatever they need to get to the poverty line but no more. (This would actually be even cheaper; it would probably cost something more like $160 billion per year.) That removes the distortion for people near the threshold, at the cost of making it much worse for those far below the threshold. Someone considering whether to work for $7,000 or work for $11,000 is, in such a system, choosing whether to work less for $17,000 or work more for… $17,000. They will surely choose to work less.

In order to solve these problems, what we would most likely need to do is gradually phase out the basic income, so that say increasing your pre-tax income by $1.00 would decrease your basic income payment by $0.50. The cost of this system would be somewhere in between that of a truly universal basic income and a threshold-based system, so let’s ballpark that as around $600 billion per year. It would effectively implement a marginal tax rate of 50% for anyone who is receiving basic income payments.

In theory, this is probably worse than a universal basic income, because in the latter case you can target the taxes however you like—and thus (probably) make them less cause less distortion than the phased-out basic income system would. But in practice, a truly universal basic income might simply not be politically viable, and some kind of phased-out system seems much more likely to actually get passed.


Even then, I confess I am not extremely optimistic. For some reason, everyone seems to want to end poverty, but very few seem willing to use the obvious solution: Give poor people money.

Cryptocurrency and its failures

Jan 30 JDN 2459620

It started out as a neat idea, though very much a solution in search of a problem. Using encryption, could we decentralize currency and eliminate the need for a central bank?

Well, it’s been a few years now, and we have now seen how well that went. Bitcoin recently crashed, but it has always been astonishingly volatile. As a speculative asset, such volatility is often tolerable—for many, even profitable. But as a currency, it is completely unbearable. People need to know that their money will be a store of value and a medium of exchange—and something that changes price one minute to the next is neither.

Some of cryptocurrency’s failures have been hilarious, like the ill-fated island called [yes, really] “Cryptoland”, which crashed and burned when they couldn’t find any investors to help them buy the island.

Others have been darkly comic, but tragic in their human consequences. Chief among these was the failed attempt by El Salvador to make Bitcoin an official currency.

At the time, President Bukele justified it by an economically baffling argument: Total value of all Bitcoin in the world is $680 billion, therefore if even 1% gets invested in El Salvador, GDP will increase by $6.8 billion, which is 25%!

First of all, that would only happen if 1% of all Bitcoin were invested in El Salvador each year—otherwise you’re looking at a one-time injection of money, not an increase in GDP.

But more importantly, this is like saying that the total US dollar supply is $6 trillion, (that’s physically cash; the actual money supply is considerably larger) so maybe by dollarizing your economy you can get 1% of that—$60 billion, baby! No, that’s not how any of this works. Dollarizing could still be a good idea (though it didn’t go all that well in El Salvador), but it won’t give you some kind of share in the US economy. You can’t collect dividends on US GDP.

It’s actually good how El Salvador’s experiment in bitcoin failed: Nobody bought into it in the first place. They couldn’t convince people to buy government assets that were backed by Bitcoin (perhaps because the assets were a strictly worse deal than just, er, buying Bitcoin). So the human cost of this idiotic experiment should be relatively minimal: It’s not like people are losing their homes over this.

That is, unless President Bukele doubles down, which he now appears to be doing. Even people who are big fans of cryptocurrency are unimpressed with El Salvador’s approach to it.

It would be one thing if there were some stable cryptocurrency that one could try pegging one’s national currency to, but there isn’t. Even so-called stablecoins are generally pegged to… regular currencies, typically the US dollar but also sometimes the Euro or a few other currencies. (I’ve seen the Australian Dollar and the Swiss Franc, but oddly enough, not the Pound Sterling.)

Or a country could try issuing its own cryptocurrency, as an all-digital currency instead of one that is partly paper. It’s not totally clear to me what advantages this would have over the current system (in which most of the money supply is bank deposits, i.e. already digital), but it would at least preserve the key advantage of having a central bank that can regulate your money supply.

But no, President Bukele decided to take an already-existing cryptocurrency, backed by nothing but the whims of the market, and make it legal tender. Somehow he missed the fact that a currency which rises and falls by 10% in a single day is generally considered bad.

Why? Is he just an idiot? I mean, maybe, though Bukele’s approval rating is astonishingly high. (And El Salvador is… mostly democratic. Unlike, say, Putin’s, I think these approval ratings are basically real.) But that’s not the only reason. My guess is that he was gripped by the same FOMO that has gripped everyone else who evangelizes for Bitcoin. The allure of easy money is often irresistible.

Consider President Bukele’s position. You’re governing a poor, war-torn country which has had economic problems of various types since its founding. When the national currency collapsed a generation ago, the country was put on the US dollar, but that didn’t solve the problem. So you’re looking for a better solution to the monetary doldrums your country has been in for decades.

You hear about a fancy new monetary technology, “cryptocurrency”, which has all the tech people really excited and seems to be making tons of money. You don’t understand a thing about it—hardly anyone seems to, in fact—but you know that people with a lot of insider knowledge of technology and finance are really invested in it, so it seems like there must be something good here. So, you decide to launch a program that will convert your country’s currency from the US dollar to one of these new cryptocurrencies—and you pick the most famous one, which is also extremely valuable, Bitcoin.

Could cryptocurrencies be the future of money, you wonder? Could this be the way to save your country’s economy?

Despite all the evidence that had already accumulated that cryptocurrency wasn’t working, I can understand why Bukele would be tempted by that dream. Just as we’d all like to get free money without having to work, he wanted to save his country’s economy without having to implement costly and unpopular reforms.

But there is no easy money. Not really. Some people get lucky; but they ultimately benefit from other people’s hard work.

The lesson here is deeper than cryptocurrency. Yes, clearly, it was a dumb idea to try to make Bitcoin a national currency, and it will get even dumber if Bukele really does double down on it. But more than that, we must all resist the lure of easy money. If it sounds too good to be true, it probably is.