The OECD’s monthly commentary says that even though U.S. growth and unemployment seem strong, this is the result of pro-cyclical government spending, the overall global economy is still relatively weak, and slowing trade raises a significant global recession risk.
This wasn’t my most prolific writing (or reading) month ever. In fact, it my have been my worst. But here are a few highlights of what I did get around to.
Most frightening and/or depressing story:
Most hopeful story:
Most interesting story, that was not particularly frightening or hopeful, or perhaps was a mixture of both:
This article claims that the rise of the entertainment industry explains slowing productivity growth, because not only does entertainment distract us from creative and productive pursuits, but our creative and productive people are pouring their energies into this sector because it is where the profits are. I don’t necessarily buy the former, because it is possible that we could be deciding as a society that we are productive enough and choosing to spend more time on pursuits that do not put ever more monetary wealth in our pockets. I think some people are doing that, perhaps not most. Perhaps in Scandinavia. But the second part does make sense to me, that the smartest and most creative people are not being drawn to the sectors where they could do the most good for society.
This article in Vox is about an entirely data-driven approach to introductory economics. The idea of asking students to discover their own theories is an interesting one, but in most fields I do think there is an established body of theory and standard practice that students should learn before they are qualified to go off reinventing their own wheels. If a new generation doesn’t know what they don’t know, they have to reinvent everything and society doesn’t make progress.
Joseph Stiglitz has a new book on what he thinks an evidence-based progressive economic platform should look like. I admit, I haven’t read the book, but I have read this Axios summary of the book. And here is my summary of that summary:
This all sounds good to me. Add some serious research spending and it just might work. The jobs guarantee might work, but would have to be coupled with a stronger disability, mental health and substance addiction safety net than we have now.
Writing in Boston Review, Harvard Professor Dani Rodrik and others talk about how public opinion has turned against the economics profession to some extent over the last decade or so, and how academic economists are trying to engage with the issues of the day, including inequality, technological change and climate change.
They list a few “economic universals” which they think will never change: “market-based incentives, clear property rights, contract enforcement, macroeconomic stability, and prudential regulation”. Traditional topics that will probably always be studied include labor, credit, and insurance markets; tax, fiscal and monetary policy; international trade; recessions and financial crises; public goods and social insurance programs. I had to look up prudential regulation, which is basically capital requirements and limits on risk in the banking sector.
This article on History News Network sums it up pretty well. Socialism doesn’t work well when it means an authoritarian government controlling all aspects of the economy in the name of “the people” (e.g., the Soviet Union). Capitalism works well for an elite few but does not work well for the majority when it allows private wealth to hijack the political process (e.g., the United States, especially in recent decades).
There is a formula that works pretty well. It’s almost boringly simple and yet seems depressingly out of reach for the U.S. as long as wealthy individuals and industries are able to buy elections and write the nation’s laws to continue stacking the deck in their favor, while using our free speech protections to wage an effective propaganda war so that the public actually supports this.
It’s a common mistake of both left and right to talk about capitalism and socialism as if there were only two choices. One-party socialist systems in less developed countries have not worked well over the past century. Capitalism as practiced in the United States and many other nations has mainly benefitted those who already are wealthy. The nations in which all citizens gain from economic growth have combined elements of market economies, private ownership, and political policies that mitigate inequality. In western Europe, public health care, nearly free university education, stronger progressive taxation, higher minimum wages, and inclusion of trade unions in corporate decision-making result in much lower inequality and much happier populations.
Well, according to Quartz, basically “dark enlightenment” is a neo-fascist ideology to beware of, in which democratic governments are replaced by corporations.
What are the tenets of Dark Enlightenment theory? There are a few consistent themes, circling around technology, warfare, feudalism, corporate power, and racism. “It’s an acceleration of capitalism to a fascist point,” says Benjamin Noys, a critical theory professor at the University of Chichester and author of Malign Velocities: Accelerationism and Capitalism.
Land believes that advances in computing will enable dominant humans to merge with machines and become cybernetic super beings. He advocates for racial separation under the belief that “elites” will enhance their IQs by associating only with each other.
Capitalism has not yet been fully unleashed, he argues, and corporate power should become the organizing force in society. Land is vehemently against democracy, believing it restricts accountability and freedom. The world should do away with political power, according to Dark Enlightenment, and instead, society should break into tiny states, each effectively governed by a CEO.
I’m reminded of a lecture I attended by Paul Romer on his idea of “charter cities”. The basic idea was to create something that looked very much like a corporate state where virtually all institutions including politics would be subordinated to the maximization of economic growth. Now, I am not accusing Paul Romer of being a fascist. In fact, in his conception people from any country can be part of the charter city, as long as they have skills and follow norms of behavior designed to maximize economic growth. But one thing his concept does appear to share is that those norms of behavior are imposed from above, and the only free choice people have is that society is a choice to either be part of it or not.
I don’t pay too much attention to stock market commentary, but another warning light on the economic dash might be that margin calls appear to have spiked. You ignore most of those warning lights most of the time, but sometimes they mean something, and if there are more of them over time and they are all flashing at once you might want to do something about it. Margin calls mean investors who have borrowed money from their brokers to buy stocks are being told by the brokers they have to pay the loans back, which forces them to sell some of what they have. It suggests the brokers are nervous the market might fall. If it actually starts to fall, this can accelerate the fall because people are then forced to sell when they don’t want to and everybody else is selling. And margin calls are just the visible tip of a debt iceberg, most of which lies unseen beneath the surface. This blog is called Wolf Street.
Most frightening and/or depressing stories:
Climate change, nuclear weapons, and pandemics. If I go back and look at last year’s post, this list of existential threats is going to be pretty much the same. Add to this the depressing grind of permanent war which magnifies these risks and diverts resources that could be used to deal with them. True, we could say that we got through 2018 without a nuclear detonation, pandemic, or ecological collapse, and under the circumstances we should sit back, count our blessings, and wait for better leadership. And while our leadership is particularly inept at the moment, I think Noam Chomsky has a point that political administration after political administration has failed to solve these problems and this seems unlikely to improve. The earthquake risk is particularly troublesome. Think about the shock we felt over the inept response to Katrina, and now think about how essentially the same thing happened in Puerto Rico, we are not really dealing with it in an acceptable way, and the public and news media have essentially just shrugged it off and moved on. If the hurricanes, floods, fires and droughts just keep hitting harder and more often, and we don’t fully respond to one before the next hits, it could mean a slow downward spiral. And if that means we gradually lose our ability to bounce back fully from small and medium size disasters, a truly huge disaster like an epic earthquake on the west coast might be the one that pushes our society to a breaking point.
Most hopeful stories:
I believe our children are our future…ya ya blahda blahda. It’s a huge cliche, and yet to be hopeful about our world I have to have some hope that future generations can be better system thinkers and problem solvers and ethical actors than recent generations have been. Because despite identifying problems and even potential solutions we are consistently failing to make choices as a society that could divert us from the current failure path. And so I highlighted a few stories above about ideas for better preparing future generations, ranging from traditional school subjects like reading and music, to more innovative ones like meditation and general system theory, and just maybe we should be open to the idea that the right amount of the right drugs can help.
Fossil fuels just might be on their way out, as alternatives start to become economical and public outrage slowly, almost imperceptibly continues to build.
There is real progress in the fight against disease, which alleviates enormous quantities of human suffering. I mention AIDS, diabetes, and Alzheimer’s disease above. We can be happy about that, of course. There are ideas about how to grow more food, which is going to be necessary to avoid enormous quantities of human suffering. Lest anyone think otherwise, my position is that we desperately need to reduce our ecological footprint, but human life is precious and nobody deserves to suffer illness or hunger.
Good street design that lets people get around using mostly their own muscle power. It might not be sexy, but it is one of the keys to physical and mental health, clean air and water, biodiversity, social and economic vibrancy in our cities. Come to think of it, I take that back, it can be sexy if done well.
Good street design and general systems theory – proof that solutions exist and we just don’t recognize or make use of them. Here’s where I want to insert a positive sentence about how 2019 is the year this all changes for the better. Well, sorry, you’ll have to find someone less cynical than me, and/or with much better powers of communication and persuasion than me to get the ball rolling. On the off chance I have persuaded you, and you have communication and/or persuasion super powers, let me know.
Most interesting stories, that were not particularly frightening or hopeful, or perhaps were a mixture of both:
Whatever else happens, technology and accumulation of human knowledge in general march on, of course. Computer, robotics, and surveillence technology march on. The human move into space is much slower and painful than many would have predicted half a century ago, and yet it is proceeding.
I’ll never drop the waterless sanitation thing, no matter how much others make fun of me. It’s going to happen, eventually. I don’t know whether we will colonize Mars or stop defecating in our water supply first, but both will happen.
The gene drive thing is really wild the more I think about it. This means we now have the ability to identify a species or group of species we don’t want to exist, then cause it not to exist in relatively short order. This seems like it could be terrifying in the wrong hands, doesn’t it? I’m not even sure I buy into the idea that rats and mosquitoes have no positive ecological functions at all. Aren’t there bats and birds that rely on mosquitoes as a food source? Okay, I’m really not sure what redeeming features rats have, although I did read a few years ago that in a serious food crunch farming rats would be a much more efficient way of turning very marginal materials into edible protein than chicken.
The universe in a bottle thing is mind blowing if you spend too much time thinking about it. It could just be bottles all the way down. It’s best not to spend too much time thinking about it.
That’s it, Happy 2019!