One Economy to Rule Them All

AND THE LIVIN’ IS EASY:

Household Debt in Perspective: Delinquency rates are rising, signaling some stress—but overall, they remain historically low. (Fisher Investments, 05/16/2024)

On Tuesday, the New York Fed dropped its Q1 Household Debt and Credit Report—a gauge garnering tons of attention with inflation running high in recent years. Many presume rising living costs are forcing ever-more households deeper into unserviceable hock—a narrative that reemerged this week. But the data don’t support the harangue.

Liberalism just keeps failing upwards.

BY THEIR HATRED OF NEOLIBERALISM SHALL YOU KNOW THEM:

A Nobel Polemicist: a review of The Road to Freedom by Joseph Stiglitz (Samuel Gregg, 5/09/24, Law & Liberty)

At this point, I wondered how much Stiglitz has actually read of Hayek and Friedman. I know of no text where they called for rule-free and regulation-free markets. Significantly, there is just one reference in Stiglitz’s footnotes to something authored by Hayek.

Yet one need only open books like The Constitution of Liberty to find Hayek, for example, pointing out that “a functioning market economy presupposes certain activities on the part of the state.” In The Road to Serfdom, Hayek even says that the “wooden insistence on … the principles of laissez-faire” did immense harm to the market liberal cause. So much, then, for unfettered markets.

More generally, anyone who has read the corpus of Hayek’s work knows that he wrote extensively about the laws and legislation best fitted for societies that take justice and rule of law seriously. That is the whole point of Hayek’s mammoth Law, Legislation, and Liberty. Stiglitz himself concedes that books like The Road to Serfdom show that Hayek was “aware of externalities” and “the need for government intervention when there are externalities.” But how can Stiglitz square this concession with his declarations that Hayek was committed to “unfettered markets”? The answer is: he can’t.

In fact, the debate between free marketers and interventionists is not about whether there should be regulation. The argument is really about what is the best way to regulate markets.

Is it through a combination of macroeconomic policies, specific interventions into particular economic sectors, the application of wide-ranging regulatory codes to economic transactions, and ongoing wealth redistributions through large welfare states and progressive taxation? Or: are markets better regulated through protections of property rights, adherence to rule of law, contract enforcement, commonsense health and safety regulations, a basic safety net, stable money, and the dynamic competition that promotes consumer sovereignty over and against vested interests like established businesses and their political allies? This is a key dispute between dirigistes like Stiglitz and those who believe in markets, and Stiglitz’s presentation of the latter’s position is a caricature.

This, however, is dwarfed by Stiglitz’s astonishing claim that the “free and unfettered markets advocated by Hayek and Friedman and so many on the Right have set us on the road of fascism.” I find it hard to believe that Stiglitz does not know that fascist regimes have historically been characterized by widespread regulation, endless interventionism, and corporatism: in short, the opposite of free market economies.

Republican liberty is the impediment to the Left/Right vision.

ALL JOE HAD TO DO WAS NOT BE DONALD:

When the Left thought free trade meant peace (Alex Middleton, 5/10/24, The Critic)

The received wisdom, Palen suggests, is that the late-twentieth-century triumph of free-market thinking was a right-wing achievement, with its origins in the interwar decades. This consensus has cracked in the face of challenges from other, newer, equally formidable strands of right-wing anti-globalism. Put simply, the dominant economic cosmologies of our time have been defined by battles within conservatism.

Palen proposes to explode these myths. He says that things look very different if we go back to the 1840s, to Manchester Liberalism and to the political ideologies associated with Richard Cobden. With its overlapping commitments to free trade, peace and anti-imperialism, Cobdenism heralded a century and more of free-trade globalism being led — intellectually — by left-of-centre thinkers.

Socialists, communists and liberals were united by a conviction that free trade could, and would, promote democracy and justice. They also believed that it might produce, on the one hand, the end of war and, on the other, the collapse of the more pernicious imperial projects.

What the book basically wants to communicate is that the international peace movements active between the mid-nineteenth and the mid-twentieth centuries were deeply invested in the policy and philosophy of free trade.

AND THE LIVIN’ IS EASY:

Wealth of Younger Americans Is Historically High (Brendan Duke & Christian E. Weller, 4/24/24, Cap20)

Recent homebuyers move into their new condo.Recent homebuyers move into their new condo in Oceanside, New York, on May 4, 2023. (Getty/Newsday RM/Thomas A. Ferrara)
The data increasingly show that younger Americans are the winners of the strong economic recovery coming out of the pandemic, experiencing low unemployment rates and rapid wage growth. These labor market gains have also helped drive historic wealth growth for younger Americans.

New Center for American Progress analysis confirms this is also true of wealth: Recent Federal Reserve data show that the average wealth of households under 40 was $259,000 in the fourth quarter (Q4) of 2023, marking a 49 percent increase since the fourth quarter of 2019, even after adjusting for inflation. Importantly, these data likely reflect broad-based wealth growth among young people, as opposed to a small group of wealthy young people driving these gains.

No one has it harder than their father did.

SEND MORE:

Biden’s ‘border crisis’ is actually an economic success story (Zeeshan Aleem, 4/08/24, MSNBC)

Economist Ernie Tedeschi, now a research scholar at Yale University, writes in a new report that the rise in the immigrant population since 2020 accounts for at least a fifth of U.S. growth since then. That goes a long way toward explaining why the U.S. has grown almost twice as fast as the next best performer among G7 economies since the pandemic. Furthermore, he notes, “absent immigration, the US labor supply would have shrunk by 1.2 million since 2019. Instead, it expanded by 2 million.”

And we still have massive employee shortages.

ABOVE AVERAGE IS OVER:

Generative AI for Economic Research: Use Cases and Implications for Economists (Anton Korinek„, September 2023)

Generative AI, in particular large language models (LLMs) such as ChatGPT,
has the potential to revolutionize research. I describe dozens of use cases along six
domains in which LLMs are starting to become useful as both research assistants
and tutors: ideation and feedback, writing, background research, data analysis,
coding, and mathematical derivations. I provide general instructions and demonstrate specic examples of how to take advantage of each of these, classifying the
LLM capabilities from experimental to highly useful. I argue that economists
can reap signicant productivity gains by taking advantage of generative AI to
automate micro tasks. Moreover, these gains will grow as the performance of AI
systems across all of these domains will continue to improve. I also speculate on
the longer-term implications of AI-powered cognitive automation for economic
research.

NO SUCH BEAST:

REVIEW: of Who Cooked Adam Smith’s Dinner by Katrine Marçal (Anna Johnston, Womens Budget Group)

Economic man is a strange creature- he needs no-one, acts only according to self-interest, and is always rational and anonymous in his choices. Crucially, he was also not born. He does not have family and is unobscured by relationships or emotions.

Clearly, this is going to present some problems when we try to apply this alien invention to actual economic activity.

NEOLIBERALISM JUST KEEPS FAILING UPWARDS:

Too Much: Three First World Problems (Art Carden, Mar. 21st, 2024, AIER)

Magnificently, free markets that have given us these “problems” also give us solutions. Capitalism comes to the rescue. Do you have a weight problem? Gyms cater to people of all budgets and with all sorts of fitness goals. There are cheap gyms like Planet Fitness (I’ve been a member for about seven years and honestly don’t use my membership that well) and more expensive gyms that are almost country clubs. Do you have too much stuff? There is a burgeoning market for professional organizers who will help you keep it all organized (this episode of EconTalk with Adam Minter, author of Secondhand, is fascinating). Too busy? We can’t all hire a personal assistant, but there is a similar market for companies that help people manage their projects and calendars (I’m a member of Asian Efficiency and was on their podcast in 2022).

Where our ancestors lived lives that were solitary, poor, nasty, brutish, and short, the twenty-first century has us overwhelmed with connections, opportunities, and experiences.