ONLY IDEOLOGUES BET AGAINST AMERICA:

A Soft Landing for the Economy—and Biden? (James Pethokoukis, 12/13/23, AEIdeas)

Analysts at Goldman Sachs find “the strongest statistical relationship with the election result is often with [economic] variables measured in Q2 of the election year.” What’s more, they explain, “Inflation appears to be less predictive of election results than growth and labor market variables.”

Given that inflation, rather than jobs and growth, has been America’s biggest economic problem of late, that’s good news for Biden. This, too, perhaps: First-term incumbents traditionally win reelection, unless there’s a recession.

More good news for Biden: Goldman Sachs economists forecast just a 15 percent change of a recession next year, with the JPMorgan team also upbeat:

Overall the labor market continues to look healthy, albeit with some recent softening in the trends for net hiring and wage growth. While there may be some bending in the economy, we don’t see much evidence of a break into a recession and we continue to believe that the Fed will be successful in engineering a soft landing for the economy.

PITY THE POOR MALTHUSIANS:

Twilight of the Floating Idol: On Anthony Galluzzo’s “Against the Vortex”: a review of Against the Vortex: “Zardoz” and Degrowth Utopias in the Seventies and Today by Anthony Galluzzo ( Jordan S. Carroll, December 8, 2023, LA Review of Books)

As Galluzzo persuasively argues, Zardoz allegorizes the Malthusian panics of the late 1960s and ’70s. Paul R. Ehrlich’s 1968 bestseller The Population Bomb suggested that looming environmental catastrophe demanded the intervention of experts who could figure out ways to force people in poorer nations to adopt stringent birth control measures. The Immortals in Zardoz embody this vision of ecological balance achieved through totalitarian technocratic intervention. Indeed, Galluzzo observes that the Immortals live in what turns out to be a grounded interplanetary vessel, a literalization of Buckminster Fuller’s Spaceship Earth. The Immortals’ sustainable world is an enclosed system in which everything is monitored and controlled by an advanced computer.

This “hippie modernist” utopia depends on the violent exclusion and exploitation of the rest of the human population. Here Galluzzo draws a connection to the ecofascism of Garrett Hardin, who argued that well-provisioned First World nations should ride out the coming ecological collapse by hardening their borders against refugees, allowing the rest of the planet to die. This is precisely what the Immortals have done. For their part, the Brutals represent what Ehrlich would term a “death rate solution” to the issue of excess birth rates. The Immortals have invented a false religion to convince the Brutals to do their bidding: one of them pilots a giant floating head called Zardoz that booms, “The gun is good! The penis is evil!” before showering the Brutals with small arms to exterminate the planet’s surplus population.

Wealth never peaks.

IT’S 2023; TAX CONSUMPTION:

The Income Tax Paradox (John Cochrane, December 6, 2023, The Grumpy Economist)

So why does the government tax income? Because, circa 1913, income was easier to measure than sales, value added, consumption, or other economically better concepts. When money changes hands, it’s relatively for the government to see what’s there and take a share. Tariffs really start from the same concept. It’s relatively easy to see what’s going through the port and demand a share, Adam Smith, David Ricardo and free trade be damned. But the government wanted more money than tariffs could provide.

“I DID THAT”:

Blue-collar jobs might be the best jobs (ELLE GRIFFIN, DEC 4, 2023, The Elysian)

Technology is ethereal. You might have a feeling that something’s going on behind the scenes, but you can’t see it or touch it. Similarly, the “product” sold by most tech companies is immaterial. You might be able to use it on a phone or computer, it might make work more convenient or life a little easier, but for the most part, it only physically exists on a server out in the ether.

That’s exactly the sort of thing that could spur on an existential crisis. “Those of us who sit in an office often feel a lack of connection to the material world, a sense of loss, and find it difficult to say exactly what we do all day,” says Matthew Crawford in his book, Shop Class As Soulcraft: An Inquiry Into The Value of Work.

When we can see the work we’ve done, when we can actually feel the heat of a blast furnace singing the hairs off our skin, we are more invested in what we’re doing. “You’re making something,” says Saskia Duyvesteyn, chief R&D advisor at Rio Tinto Kennecott. “And I think sometimes that’s missing from other jobs. We are actually making a product in the end, and that’s one of the things that’s different about what we do than a lot of other industries.”

Bhavana Mukunda is an electrical engineer at the copper mine, and she actually considered a job in tech before deciding to study power systems instead. “In the tech industries, you have your code, you wrote your code, it may be used, it may not be used, but [at Kennecott], the challenge is there, it’s solved, and I see the effects of it… I got to see a plant go back online because of what I did, which is pretty cool.”

WHEN YOU DITCH IDENTITY:

Nikki Haley wants to reform Social Security and Medicare. Donors are paying attention (Fredreka Schouten, 12/05/23, CNN)

Haley has called for several changes to the nation’s safety net programs, including increasing the age at which today’s younger workers would become eligible for Social Security retirement benefits and limiting the growth of benefits the wealthy receive. […]

A March CNN/SSRS poll of Republicans and Republican-leaning independents, for instance, found that 59% said it was “essential” that the GOP nominee for president “pledges to maintain Social Security and Medicare as they are.”

And just 7% of Republicans surveyed in October in an AP/NORC poll said that the government was spending too much on Social Security.

It’s little wonder then that Trump has steadfastly advocated keeping the programs as they are – despite his past support for major changes, including raising the retirement age to 70 and privatizing Social Security.

DeSantis has distanced himself from his votes as a congressman for nonbinding resolutions that would have increased the threshold for seniors to collect Social Security benefits to age 70.

SMELLS LIKE AMERICAN SPIRIT:

After 3 years of pain, America has finally achieved economic nirvana (Neil Dutta, Dec 3, 2023, Business Insider)

The signs of a well-balanced economy are everywhere. The most obvious example is the slowdown in inflation. The core consumer price index, the widely cited measure of inflation that strips out volatile categories such as food and energy costs, has risen since June at an annualized rate of 2.8%, roughly half the pace heading into the year. And there are clear signs of continued disinflation on the horizon: Wholesale auction prices for vehicles imply used-car prices could start to come down, private measures of rent prices suggest that housing inflation will continue to cool off, and an improvement in supply chains suggests prices for core goods outside cars, including washing machines and clothes, will ease.

Another positive signal is coming from productivity data, which measures a worker’s output within an hour. Productivity growth strengthened notably in the third quarter, hitting its highest nonrecession level since 2003, and appears to be growing in line with its pre-pandemic trend. The growth in the number of hours people are working has slowed, but output has been steady, meaning people are accomplishing more in less time. This boom in productivity means that as workers get more efficient, businesses can give employees pay raises without having to turn around and pass on those increased labor costs to consumers in the form of price hikes.

While things are slowing in the labor market, it’s not enough to cause a panic about unemployment. The October jobs report — with the economy adding just 150,000 jobs and the unemployment rate ticking up to 3.9% — was a disappointment. Of particular notice, the unemployment rate has increased by half a percentage point over the past six months. The uptick in joblessness is close to triggering the Sahm rule, which states that the economy is in recession when the average rate of unemployment over the prior three months is half a percentage point above its prior 12-month low. The current three-month average is 3.8%, a meaningful uptick from the low point of 3.5% in April but not quite high enough to hit the 4% average needed to trigger the rule.

But the job market isn’t all bad news. Over the past three months, average hourly earnings for all employees have jumped 3.2% — a strong number for American workers that’s broadly consistent with the Fed’s long-term inflation objectives. It’s also highly likely that the last employment report understated the growth in nonfarm payrolls since tens of thousands of workers were on strike. (You need to be on the job to be counted as employed.)

THE SOLUTION TO POVERTY IS WEALTH:

The first results from the world’s biggest basic income experiment: Money always helps, but for the very poor, one lump sum can last a long time (Dylan Matthews, Dec 1, 2023, Vox)

The latest research on the GiveDirectly pilot, done by MIT economists Tavneet Suri and Nobel Prize winner Abhijit Banerjee, compares three groups: short-term basic income recipients (who got the $20 payments for two years), long-term basic income recipients (who get the money for the full 12 years), and lump sum recipients, who got $500 all at once, or roughly the same amount as the short-term basic income group. The paper is still being finalized, but Suri and Banerjee shared some results on a call with reporters this week.

By almost every financial metric, the lump sum group did better than the monthly payment group. Suri and Banerjee found that the lump sum group earned more, started more businesses, and spent more on education than the monthly group. “You end up seeing a doubling of net revenues” — or profits from small businesses — in the lump sum group, Suri said. The effects were about half that for the short-term $20-a-month group.

The explanation they arrived at was that the big $500 all at once provided valuable startup capital for new businesses and farms, which the $20 a month group would need to very conscientiously save over time to replicate. “The lump sum group doesn’t have to save,” Suri explains. “They just have the money upfront and can invest it.”

Intriguingly, the results for the long-term monthly group, which will receive about $20 a month for 12 years rather than two, had results that looked more like the lump sum group. The reason, Suri and Banerjee find, is that they used rotating savings and credit associations (ROSCAs). These are institutions that sprout up in small communities, especially in the developing world, where members pay small amounts regularly into a common fund in exchange for the right to withdraw a larger amount every so often.

“It converts the small streams into lump sums,” Suri summarizes. “We see that the long-term arm is actually using ROSCAs. A lot of their UBI is going into ROSCAs to generate these lump sums they can use to invest.”

RATES ARE USURIOUS:

Disinflation Dream Come True (Alexander W. Salter, December 1, 2023R, AIER)

The current target for the federal funds rate, which is the Fed’s key policy interest rate, is between 5.25 and 5.50 percent. Using core PCEPI growth, the inflation-adjusted range is 3.29-3.54 percent. As always, we must compare this to the natural rate of interest. Sometimes called r* by economists, this is the inflation-adjusted rate consistent with maximum employment and output, as well as non-accelerating inflation. We can’t observe this rate directly. But we can estimate it. Widely cited figures from the New York Fed place r* between 0.57 and 1.19 percent. That means current market rates are roughly three times as high as the estimated natural rate!

THE SOLUTION TO POVERTY IS WEALTH:

Evaluating the Success of the War on Poverty since 1963 Using an Absolute Full-Income Poverty Measure (Richard V. Burkhauser, Kevin Corinth, James Elwell, and Jeff Larrimore, Journal of Political Economy)

We evaluate progress in the War on Poverty as President Lyndon B. Johnson defined it, which established a 20% baseline poverty rate and adopted an absolute standard. While the official poverty rate fell from 19.5% in 1963 to 10.5% in 2019, our absolute full-income poverty measure—which uses a fuller income measure and updates thresholds only for inflation—fell from 19.5% to 1.6%.

LAST MEN:

People, stop being crybabies: Life is better now than ever (Quin Hillyer, November 27, 2023, Washington Examiner)

Far too many people have become spoiled, ungrateful, whiny wretches.

That’s the proper conclusion from a Wall Street Journal poll showing that barely more than a third of people believe “the American dream — that if you work hard, you’ll get ahead — still holds true.” Compared to the 36% who say it still holds true, 45% said it once was true but not anymore, and 18% said it never held true.

Only the 36% have it right. The rest are, to put it bluntly, pathetic defeatists. Likewise for the 50% who say life for ordinary Americans is worse than it was 50 years ago, against only 30% who say it is better.

We have a powerful urge to be the hero of our own stories, which we can’t be if we acknowledge how affluent we are and how easy modern life is