Savings

From J. P. Morgan via Michael Batnick comes a very interesting chart of the personal savings rate over the last 60 years and it’s actually pretty astonishing. Cruise on over and take a look at it. It doesn’t flat-out prove anything but it suggests a lot and I’ve going to reflect on what it suggests in this post.

To put that personal savings rate into perspective in 2020 the personal savings rate was higher than it’s been in my lifetime. that’s a higher savings rate than Japan or Switzerland in 2015—both are countries well known for high savings rates. It’s not as high as China’s personal savings rate. In general a high savings rate means that people are worried about the future and Americans were more worried in 2020 than any time I can remember.

The household savings rate was absolutely terrible during the Aughts. That’s also the period during which American industries were being offshored, largely to China. I suspect those two things are related.

That high a savings rate suggests that the handouts from the federal government in 2020 didn’t stimulate much of anything other than savings. It was badly designed—not nearly targeted enough. Will the new round of handouts stimulate the economy or be saved? I’m not sanguine about that.

I guess there’s a glass half full way of looking at it. Today’s savings means the possibility of more consumption in the future. That’s balanced by John Maynard Keynes’s wisecrack that in the long run we’re all dead.

0 comments

Splitting the Baby

I can see several different scenarios for ending the COVID-19 outbreak in the U. S. One of them is to inoculate enough people in the U. S. against the disease so that between those who have some natural immunity either because they’ve already had it or they’re otherwise naturally immune and those who’ve been inoculated that the disease stops spreading. Or at least its spread slows. The “gotcha” on that is “people in the U. S.”. that strategy presupposes the ability and willingness to stop people entering the country who are carrying the disease.

We could also forcibly inoculate people entering the country against the disease but somehow I can’t envision that happening.

Another way is to be prepared to inoculate the entire world against the disease. As I’ve been saying for most of the last year, inoculating 7 billion people is a problem a couple of orders of magnitude more complicated and expensive than inoculating 330 million (or 200 million or whatever it takes).

What does the Biden Administration have in mind? If, in their zeal to be more virtuous than the hated Trump Administration, they decline from testing and quarantining people entering the country, do they just prefer that the outbreak continue indefinitely? Won’t that expose them to the same charges they’ve been leveling against the Trump Administration’s response to the disease?

5 comments

Lining Their Pockets

It takes Bhaskar Sunkara quite a while to get to the point in his piece in the Guardian about the limitations of the present demands for “equity” and its emphasis on action by private companies:

First, it might satisfy younger staffers who want to feel like they’re working for companies that are stalwarts of anti-racism. Second, some consumers might like such anti-racist gesturing. Third, showing a commitment to diversity and arranging for a diversity consultant to come in is cheaper than dealing with an anti-discrimination lawsuit, having to deal with a Twitter-led consumer boycott for a misstep, or paying black and brown workers more.

Yet even if corporations aren’t driving the race-conscious awakening, they’re willing to adapt to the new environment because the political demands flowing from activists are increasingly compatible with corporate profit-making and governance. Corporations are also more than happy to monetize the new social justice interest. Just think of Hollywood – which once blacklisted socialist actors and directors in the cold war – rushing to make films with watered-down accounts of Black Panther leaders like Fred Hampton (who was a Marxist) or the Chicago Seven (all of whom were radical anti-capitalists at the time).

Similarly, companies like Apple, where workers in the secretive Chinese complex that manufactures iPhones attracted global concern after a spate of suicides, just brought out a special edition $429 Black Unity Apple Watch that was marketed for Black History Month. Apple says: “The Black Unity Sport Band is inspired by the pan-African flag and made from soft, high-performance fluoroelastomer with a pin-and-tuck closure laser-etched with ‘Truth. Power. Solidarity.’” Where is the power or solidarity for the workers toiling in factories in China, one might wonder? Or for child workers in the Democratic Republic of Congo who toil and die in mines extracting raw materials like cobalt that are used in iPhones. One doesn’t hear anything about that kind of material injustice affecting the working class from the global south when corporations make their self-congratulatory PR statements around inclusion.

They would rather focus on symbolism and racial-justice-themed commodities and products than contend with more expansive state oversight of private employment decisions, like an affirmative action program. Better to have Kendall Jenner appearing in a schmaltzy BLM-themed Pepsi ad than paying more in taxes to help working-class people in the form of an expanded welfare state and cash transfers.

I wish he’d submit some evidence that there’s actually a connecting link between “paying more in taxes” and helping “working-class people”. In the U. S. the primary effect of higher marginal tax rates and a complicated personal and corporate income tax system is to enhance the power of Congress who then sells exemptions from the tax to the highest bidders. And for some reason increased revenues never go to help the poor but to hire people ostensibly to help the poor. The NGOs, contractors, employees, and higher wages for them always seem to materialize but the help for the poor is harder to demonstrate.

As I’ve said in other posts we’ve been here before, cf. Tom Wolfe’s “Mau-mauing the Flak Catchers” only this time the flak catchers are corporate HR departments rather than beleaguered federal, state, and local government employees.

1 comment

Where’s Joe?

After reaffirming how much more they like President Biden than his predecessor, the editors of the Washington Post urge him to conduct a press conference:

But each of his 15 most recent predecessors, including Mr. Trump, held a full news conference within their first 33 days in office. Mr. Biden has been in office for 46 days. It was only after journalists’ complaints became increasingly loud — and following a wave of bad press — that Ms. Psaki announced Friday that the president would appear for an extended, unaccompanied question-and-answer session with reporters.

Though Mr. Biden regularly answers a smattering of questions after making announcements or other events, Post media critic Erik Wemple points out that these often perfunctory exchanges are no substitute for formal, solo news conferences at which reporters can ask follow-up questions, answers are supposed to be more than a couple of words long, and the president’s thoughts on a wide range of issues can be mined. Mr. Trump’s first news conference gave Americans an early sense of the chaos and indignity that would define his administration, as he ranted about cable news and personal grudges.

Mr. Biden should be eager to advertise his more thoughtful, reality-based approach. He should do so in front of reporters, for extended periods of time, and more often than his late start would suggest.

IMO those suggesting that Mr. Biden is not holding press conferences because he’s incapable of doing so are confusing his speech impediment with dementia but not conducting a press conference feeds the rumor mill. The editors are right. It’s past time for such a press conference.

4 comments

WHO Mulligan

The editors of the Washington Post are urging the World Health Organization to begin another investigation into the origins of COVID-19:

Another hypothesis, that the pandemic was ignited by some kind of laboratory leak or accident, is denied by China. However, a senior researcher at the Wuhan Institute of Virology, Shi Zhengli, was working on “gain of function” experiments, which involve modifying viral genomes to give them new properties, including the ability to infect lung cells of laboratory mice that had been genetically modified to respond as human respiratory cells would. She was working with bat coronaviruses that were genetically very similar to the one that caused the pandemic. Could a worker have gotten infected or inadvertent leakage have touched off the outbreak in Wuhan?

The joint WHO-China team said in its Feb. 9 news conference in Wuhan that the laboratory hypothesis was “extremely unlikely” and would not be further studied; later, Dr. Tedros said that nothing was off the table. As the 26 scientists point out in their letter, the team lacked the training and forensic skills required to investigate this possibility. They were under strong pressure from China to steer clear of the subject altogether.

What’s needed is an independent, multidisciplinary and unfettered investigation into the origins of the outbreak, both the zoonotic and laboratory hypotheses. China’s obduracy is not going away. The WHO, a membership organization, lacks the powers to pry open closed doors in China, and there is not another good alternative. However, Dr. Tedros could appoint a new team of highly qualified international experts, including forensic specialists, to investigate the laboratory-leak hypothesis, and forcefully insist that China not stand in its way. If he openly challenged China on this matter, he would have the support of a world wanting to know how this nightmare began and how to prevent another.

What I have been hearing lately are somewhat desperate attempts at finding an explanation, any explanation, which does not situate the origins of COVID-19 within China. Frozen food imported from Europe. Zoonotic transmission from Thailand. No explanation has been offered on how the first cases reported in China managed to contract the disease from frozen food or from Thailand while other people more conveniently situated for the virus managed to avoid it.

As Conan Doyle wrote “Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth”. Perhaps they’re disinterested in the truth.

4 comments

The Appropriate Response

Speaking of rearranging the deck chairs, I presume you’ve heard about the 30,000, that’s 30,000 organizations whose email systems running Microsoft’s Exchange Server, have been compromised by Chinese hackers, apparently supported by the Chinese government.

What’s the appropriate response?

  1. Nothing. What is there we can do?
  2. Every single company and every single individual whose information was compromised should sue Microsoft in the largest class action suit the world has ever known. Maybe the company will survive, maybe it won’t.
  3. Microsoft should be punished by the government for something-or-other. Show me the company and I’ll show you the crime.
  4. We should make it as difficult as we possibly can for China to access the Internet.
  5. We should use hackers of our own to take as many Chinese systems down as we can.
  6. We should treat it as an act of war.

I have no idea what the U. S. should do. Maybe all of them.

4 comments

Rearranging the Deck Chairs

In a piece at the Peoria Journal Star by Bill Ruthhart and John Byrne (which may reproduce a piece originally published in the Trib) the authors muse over what Boss Madigan’s ouster may portend:

The change is being driven by generational, ideological and demographic shifts, with federal law enforcement and organized labor providing major assists. The result is a move away from iron-fist bossism toward a more diffuse leadership structure that’s more diverse and practices an increasingly progressive style of politics centered on economic and racial equity.

Michael Madigan’s departure as party boss and House speaker is expected to accelerate that change, say more than two dozen Chicago elected officials and political operatives the Tribune interviewed. More independent candidates may be emboldened to run for office, leading to a more freewheeling legislature and City Council, and, perhaps, state party. In just the last two months, Illinois Democratic leadership already is more diverse — Emanuel “Chris” Welch is the first Black House speaker, and new state party chair, U.S. Rep. Robin Kelly, is the first African American and woman to hold the post.

The optimistic view is that we’ll see a better, less corrupt, more Democratic Chicago and Illinois Democratic Party. My own view is more aligned with that of Fritz Kaegi:

Major reforms around campaign finance, lobbying and transparency need to happen for Chicago’s politics to truly transform, said county Assessor Fritz Kaegi. Modest changes on the margins, he warned, could result in the machine simply giving way to a scattering of smaller fiefdoms still susceptible to corruption.

“The public has realized that Chicago’s old patronage model in all of its different manifestations was not working,” said Kaegi, a progressive who in 2018 ousted assessor and then-county Democratic Chairman Joe Berrios, an old-school patronage chief who oversaw an error-riddled and inequitable property tax assessment system. “No one in the public wants a boss overseeing a black box, and the answer is a more transparent government with a more level playing field.”

Critics of Chicago’s rising progressive reform movement contend it represents a new form of strongman politics, led by unions. Former Northwest Side Ald. Richard Mell said some progressive City Council members “can’t go against anything the teachers union wants.”

IMO the new bosses will just try to take their own places at the trough and very little will change.

The big question is not whether the new faces being elected are white, black, or brown or whether the people with those faces are LGBTQ or heterosexual it’s what they do once they’re in office. If they keep following the party bosses and continue pulling the same cons it won’t matter what their race, ethnicity, gender, identification, or ideology is. It will be the same old corrupt machine with new bosses and faces.

3 comments

Progressives Aren’t Liberals

It takes Ross Douthat a very long time to get to his point about “cancel culture” in his New York Times column but he does get around to it eventually:

I don’t expect “The Cat in the Hat” to be unpublished or my own tracts to swiftly vanish. But it was a good thing when liberalism, as a dominant cultural force in a diverse society, included a strong tendency to police even itself for censoriousness — the ACLU tendency, the don’t-ban-Twain tendency, the free-speech piety of the high school English teacher.

Now liberal cultural power has increased, the ACLU doesn’t seem very interested in the liberties of non-progressives anymore, and Dr. Seuss sells as pricey samizdat.

I don’t know what awaits beyond this particular Zebra, and I’d rather not find out.

The problem is that progressives aren’t liberals. Liberals defend freedom. I don’t know what progressives believe in these days. Power, that’s for sure. Beyond that I simply don’t know. I’m not a progressive.

Presumably, he’s making what is another example of a slippery slope argument. It certainly look looks like there’s a chain of steps in a bad direction involved.

10 comments

Misreading History

I found both things with which I agreed and things with which I disagreed in Gideon Rose’s meandering piece at Foreign Affairs, “Foreign Policy for Pragmatists”. I found this passage, about the events on January 6, thought-provoking:

Was the riot a political protest that got out of hand? An attempted putsch? A heroic defense of the republic against satanic pedophiles? It was all of these and more, because the event was streaming on several platforms simultaneously—not just the conventional tv networks but also the inner mental channels of the deluded rioters. This was history as tragedy and farce combined; the casualties included a woman who was reportedly trampled to death while carrying a flag saying “Don’t Tread on Me.”

The most persuasive reading of the day is as immersive theater, and not just because the marchers came in costume. It played like a mass live production of Euripides’s Bacchae, the tale of a mysterious cult leader who wreaks vengeance on a city that disrespects him by whipping its citizens into a frenzied nihilistic rampage. Some men just want to watch the world burn. And some crowds just like the way it hurts.

The riot’s practical implications are deeply disturbing. But its theoretical implications are more so. For example, one leading proponent of the big lie in question, Peter Navarro, was a crucial architect of the Trump administration’s trade policy. It will be interesting to see how mainstream scholarship on international political economy incorporates conspiracy theorizing into the heart of its analysis.

but I think his conclusion is a gross misreading of American history, recent history in particular:

The Biden administration, in short, does not face a tragic choice of pessimism, optimism, or just winging it. Instead of embracing realism or liberalism, it can choose pragmatism, the true American ideology. The key is to draw on diverse theoretical traditions to develop plausible scenarios of many alternative futures, design and track multiple indicators to see which of those scenarios is becoming more likely, and follow the evidence honestly where it goes.

Wilsonianism, the missionary impulse to spread your philosophy, whether democracy, free markets, or women’s rights to other countries, has dominated foreign policy thought in both Republicans and Democrats for some time. You can find it in Bush’s prosecution of the Iraq War and in Obama’s actions in Syria. It’s only pragmatic to the extent that you consider the acceptance of those beliefs in other countries as a) possible and b) in the U. S. interest. Pragmatic in terms of domestic politics? Perhaps. Pragmatic as foreign policy? That’s not credible.

Additionally, I don’t see American foreign policy as transient and changeable as he does. Quite to the contrary I think it’s been remarkably constant over the years, especially when compared with other major powers. China, Germany, France, and the UK aren’t pursuing the same goals as they were 80 years ago. We are.

Quite to the contrary I see American foreign policy as an emergent phenomenon, composed of the competing forces in American politics, optimistic and pessimistic, pragmatic and idealistic.

Consequently, I see it as highly unlikely that the Biden Administration will learn much from history or that it will be transformative in our foreign policy. It will be buffeted by those forces to form its own synthesis, just as every previous administration has.

2 comments

Not All Reforms Are Good

It’s gratifying to see others espouse the positions I’ve been arguing here for some time. That’s the case with this Bloomberg editorial, proposing the return of “earmarks”:

Earmarking got a bad rap over the years, and not entirely without reason. Total spending on such measures rose from less than $3 billion in 1991 to $29 billion at its peak in 2006. Tales of misspent funds proliferated. Favors were exchanged. Crimes were committed. You might recall a $223 million set-aside for connecting a remote Alaskan town to a yet more remote island. An uproar over this “bridge to nowhere” was one reason both parties suspended earmarks altogether in 2011.

In fact, though, such boondoggles were the exception. Over the years, lawmakers generally requested small-dollar earmarks to solve local problems or fund workaday projects. The process often made Congress more responsive to regional needs and legislators more attentive to what they were passing. Because earmarks merely directed funds that were already being appropriated, moreover, they required no new spending and added nothing to budget deficits.

More important, they created incentives for compromise. A lawmaker looking to advance a general-interest bill could sweeten the pot by funding local initiatives favored by an opposition member. This gave the minority an interest in governing, encouraged bipartisanship, and helped resolve collective-action problems. Although unlovely, it was often quite consequential: Both George W. Bush’s Medicare expansion and Barack Obama’s Affordable Care Act relied on earmarks (broadly defined) for passage.

Eliminating earmarks was seen as a way of cleaning up government and reducing spending. Instead it turned out to be a formula for making it difficult to pass legislation. That is all too frequently the case with such reforms. Take the present civil service system. Please.

As Yogi Berra put it in theory there’s no difference between practice and theory but in practice there is.

5 comments