This morning I was confronted by one of the more depressing Substacks I have read lately and wanted to comment on it. After a preamble Michael W. Green comes out strong:

And so now, let’s tug on that loose thread… I’m sure many of my left-leaning readers will say, “This is obvious, we have been talking about it for YEARS!” Yes, many of you have; but you were using language of emotion (“Pay a living wage!”) rather than showing the math. My bad for not paying closer attention; your bad for not showing your work or coming up with workable solutions. Let’s rectify it rather than cast blame.

I have spent my career distrusting the obvious.

Markets, liquidity, factor models—none of these ever felt self-evident to me. Markets are mechanisms of price clearing. Mechanisms have parameters. Parameters distort outcomes. This is the lens through which I learned to see everything: find the parameter, find the distortion, find the opportunity.

But there was one number I had somehow never interrogated. One number that I simply accepted, the way a child accepts gravity.

The poverty line.

I don’t know why. It seemed apolitical, an actuarial fact calculated by serious people in government offices. A line someone else drew decades ago that we use to define who is “poor,” who is “middle class,” and who deserves help. It was infrastructure—invisible, unquestioned, foundational.

This week, while trying to understand why the American middle class feels poorer each year despite healthy GDP growth and low unemployment, I came across a sentence buried in a research paper:

“The U.S. poverty line is calculated as three times the cost of a minimum food diet in 1963, adjusted for inflation.”

I read it again. Three times the minimum food budget.

I felt sick.

In the balance of the post Mr. Green analyzes that and arrives at the conclusion that the actual threshold household income below which people are poor is $140,000. Let that sink in for a while. The implications are staggering. By that reckoning not only are most Americans poor but there is no practical, foreseeable strategy for changing it. Contrary to his own criticism in that early passage he presents none, no doubt for that reason.

He introduces some worthwhile ideas. One of them is the “cost of participation”:

To function in 1955 society—to have a job, call a doctor, and be a citizen—you needed a telephone line. That “Participation Ticket” cost $5 a month.

Adjusted for standard inflation, that $5 should be $58 today.

But you cannot run a household in 2024 on a $58 landline. To function today—to factor authenticate your bank account, to answer work emails, to check your child’s school portal (which is now digital-only)—you need a smartphone plan and home broadband.

The cost of that “Participation Ticket” for a family of four is not $58. It’s $200 a month.

The economists say, “But look at the computing power you get!”

I say, “Look at the computing power I need!”

The utility I’m buying is “connection to the economy.” The price of that utility didn’t just keep pace with inflation; it tripled relative to it.

In 1955 (his benchmark year) about 75% of Americans had telephones in their homes so IMO that’s a reasonable factor in the “cost of connection”. I’m not entirely confident in his estimate of the cost of that—the canceled checks I have reflect a figure somewhat higher than that.

A lot more than the things he lists have changed since 1955. For one thing where people live has changed enormously since then. In 1955 35% of the population lived in the South. Today nearly 40% do and most of those live in the major cities of the South, e.g. Dallas, Houston, Miami, etc. The implications of that on his estimate of the change in housing costs is considerable.

Here’s a mind boggling figure:

Healthcare: In 1955, Blue Cross family coverage was roughly $10/month ($115 in today’s dollars). Today, the average family premium is over $1,600/month. That’s 14x inflation.

I think he’s underestimating the cost of healthcare insurance in 1955. I have the check stubs to prove it. I do wonder what the total effect that monstrous growth in costs has on the overall cost-of-living figure he’s coming up with when you consider primary and secondary effects.

I also think that he’s making some bad assumptions. For example, two jobs in a household does not require two automobiles (and maintenance, insurance, etc.) It doesn’t even require one. One or both can take public transportation. For the first several years of our marriage my wife and I were both employed but shared a single car. My understanding is that a lot of people who live in New York City, for example, don’t own cars at all.

Furthermore, averages are not as meaningful when analyzing things that don’t occur in a standard distribution than than they are in things that are. The top-selling smartphone in the country is the iPhone Pro Max ($1,299). The tenth largest seller is the moto g ($159) . Either achieves the connectivity about which Mr. Green speaks. An iPhone is a luxury (and maybe a status symbol) not a necessity.

I recommend reading the whole thing. Despite its flaws, I think he’s put his finger on something, namely the factors behind the widespread insecurity. People with household incomes between the official poverty rate but less than $100,000 have a lot to be insecure about.

And it explains the widespread insecurity about illegal immigration.

Another thing it highlights is how problematic the federal approach to making policy is. Several differing conclusions might be drawn from that. I think that more should be done at the state level and less at the federal level (sadly, that doesn’t help Illinois or Chicago much).

The following data are derived from the Census Bureau’s ACS:

We continue to have race problems in the United States but they are not what many seem to assume as the table above rather clearly illustrates. Yes, some people are discriminated against because of the color of their skin or race. Since “black” is inclusive of both native-born black Americans, the descendants of Southern slaves (whom the sociologist Charles Moskas called “Afro-Americans”) and recent black immigrants, the median household income of Afro-Americans must be even lower than the figure reported above.

My take is that two issues dominate. The first is that immigration does not serve Afro-Americans well. Preferences, set-asides, quotas, and other strategies have preferentially aided immigrants rather than Afro-Americans. The second is that culture, i.e. behavior, is more important than race or color.

I agree with Dr. Gordon S. Wood that America is a “creedal nation” or, as G. K. Chesterton put it more than a century ago, a nation founded on a creed. It is not an ethnic state like Denmark or even a cultural one like France.

The problems that we face today are that a significant number of our own citizens reject the creed and we have the largest non-citizen population of any time in our history many of whom have never embraced that creed. It bears mentioning that even ethnic states and cultural ones are fraying at the edges under the pressures of mass migration.

I have no idea how a creedal nation can survive under such circumstances.

The editors of the Wall Street Journal observe the argument going on in Chicago between the City Council and the mayor with bemusement:

Chicago Mayor Brandon Johnson thinks a new “head tax” on corporations is the way to balance the budget, but again Mr. Johnson’s own head seems to be lost in the progressive clouds. The City Council’s finance committee voted 25-10 on Monday to reject his revenue package, amid criticism that included some of the Mayor’s allies.

“I am not a supporter of the head tax at any level,” Alderman Pat Dowell, whom Mr. Johnson appointed to the finance committee, told reporters this month. Alderman Timmy Knudsen said the mayor’s office had falsely claimed he was a supporter of the head tax. That was a “complete lie,” he told the press: “I have been a ‘heck no’ the whole time.”

Mr. Johnson’s idea is to levy a tax of $21 per employee on businesses with more than 100 workers. This would punish companies that are doing Chicago a favor by staying in downtown offices despite the city’s dysfunctions, rather than fleeing elsewhere. Only three other big cities have a head tax, according to the Chicago Policy Center, and Mr. Johnson’s plan has a far higher rate than the ones levied by Denver, San Jose and San Diego.

I don’t think the editors understand what is going on. The argument is a microcosm of the argument ongoing within the Democratic Party. The mayor is considerably more progressive than all but a few city council members. He has views, ideas, and objectives all of which involve spending more money.

The mayor believes that Chicago is not spending nearly enough, this despite Chicago’s already exorbitant spending and high taxes and fees. He doesn’t believe he was voted into office to cut expenses but to expand them. He is outraged that “the rich” (whether companies or individuals) “aren’t paying their fair share” whatever that may mean.

In that context he doesn’t really care about Econ 101, the city’s high expenses and taxes, or even the city’s longterm viability. Using an expression borrowed from the financial sector, his view is strictly IBGYBG (“I’ll be gone; you’ll be done). A short term one. He’s looking at things from the standpoint of what he wants to do today not what that will do tomorrow.

Unfortunately, Chicago has been taking that view for decades and after years of kicking the can down the road we’re running out of road. Just to give one example take the Chicago Public Schools. According to the NCES in 1990 about 400,000 students were enrolled in the CPS compared to 350,000 now. Nonetheless fewer Chicagoans are spending almost twice as much per student as we were then. We’ve got to bring wants into alignment with our decreasing ability to pay. The same case can be made for the police department, fire department, and every other city department.

Last week I lamented that no one had produced a plan that would allow Ukraine to prevail in its war against Russia. Yesterday seven “experts” put forward their plans in a piece in the New York Times. The only expert calling for victory for Ukraine was a former Ukrainian foreign minister. Another of the experts, a Russian, placed the blame on the present situation on NATO. The consensus among those who were neither Russians nor Ukrainians was mildly supportive of the Trump Administration’s 28-point plan which others have condemned as being pro-Russian.

The closest thing to such a plan was produced by Bernard-Henri Lévy in an op-ed in the Wall Street Journal. After complaining about Ukraine’s allies:

The problem is the allies. For nearly four years and through four films, I have said this, repeated it, and shown it again and again: From day one, all of the allies have systematically been one step behind—they sent helmets when Javelin missile launchers were needed, Javelins when artillery was needed, howitzers when trench warfare was giving way to war in the sky, antiaircraft defenses when long-range Scalp or Storm Shadow missiles were required, tanks when planes were needed, planes after the enemy had adapted its air defenses. . . . Always the right weapon, always six months late.

He singles out France:

And there is the Nov. 17 agreement signed by France’s President Emmanuel Macron, providing for the delivery, within 10 years, of 100 Rafale aircraft, 600 long-range AASM bombs, and 8 SAMP/T batteries, similar to the American Patriot.

But alas, within 10 years. Why? The urgency is now.

He might consider the possibility that France is incapable of providing the promised support any faster than that.

Here’s his plan:

And the absolute priority is to respond to the request President Volodymyr Zelensky has been making since day one, to which we have all remained more or less deaf, and on which the outcome of the war depends: Close the sky; prevent Russian bombs, missiles, drones from targeting our civilians, pulverizing our cities, and destroying our infrastructure—and then we will win.

Doing this requires three crucial steps: First, for France to set an example by delivering enough Patriot-type batteries to protect all major cities urgently, not in dribs and drabs. Second, for the U.S. and other allies to assure that the weapons provided are allowed to strike deep into Russia. Third, to finish integrating Ukraine into the network of radars, sensors and satellites that allow NATO armies not only to jam the sky but to detect incoming missile salvos.

As it’s been explained to me what he’s proposing cannot be done without the direct participation of American soldiers which, remains, correctly, off the table. If that’s an incorrect understanding, I would have no problem with providing those capabilities to the Ukrainians (with appropriate oversight) for the reasons I have enunciated in the past.

Lately some have been making the analogy to Yugoslavia and I think that’s correct. Just as with the Yugoslavian civil war the Russo-Ukrainian War is taking place entirely within Europe. It is a European war. If providing the resources necessary for the Ukrainians to prevail requires the European countries to go on a wartime footing, so be it. That’s what they should do. Our role should be limited to providing support and deterring the Russians from attacking our NATO allies directly. Personally, I think the specter some have raised of Russian troops marching into Berlin, Paris, and Rome is laughable.

The distance between Moscow and Kiev is roughly the same as that between Chicago and Kansas City. For going on three years Russia has been stalled in a strictly regional conflict with a hugely smaller foe. Russia’s attack on Ukraine was wrong and unlawful but is hardly a global threat.

I believe that ending the war is the highest priority with preserving Ukraine’s dignity a much lower one. Like it or not Trump’s plan is realistic and a step towards that end. As the “experts” (other than the Ukrainians) in the NYT piece affirmed, a ceasefire is the immediate necessity to save Ukrainian lives.

I have been chided for not remarking on a recent story here in Chicago. Andy Koval, Jenna Barnes, and Ethan Illers report at WGN:

CHICAGO — Prosecutors Thursday filed a motion to dismiss charges against Marimar Martinez, the woman shot by Border Patrol after allegedly ramming a federal vehicle. The charges against the 21-year-old man also involved were filed to be dismissed as well.

“I’m just blessed. I’m happy. God is good,” Martinez said. “I’m just grateful for everything. Thank you to my attorneys. They did a great job. To my family in the background, I’m just happy. I’m excited.”

The incident unfolded Oct. 4 near 39th and Kedzie in the city’s Brighton Park neighborhood after federal border patrol agents claimed they were followed for miles by a convoy of civilian vehicles.

Prosecutors allege Martinez and the aforementioned 21-year-old, Anthony Ruiz, used their vehicles to barricade and ultimately hit the agents’ SUV to block them in.

When the agents got out, prosecutors claimed Martinez drove her vehicle directly at one of them and a border patrol agent then shot her.

“He’s going to pay for those shots,” attorney Chris Parente said.

She transported herself to a nearby hospital after the shooting.

Parente fired back at federal authorities and claimed federal agents were the real danger to the community, not his client.

“These agents were lying about what happened. Ms. Martinez never rammed anybody. These agents hit Ms. Martinez. These agents got out and shot Ms. Martinez, whose only crime was warning her community that ICE was in the neighborhood acting in a way that multiple judges in this building have said is unlawful,” Parente said.

Federal judge Heather McShain disagreed with prosecutors and said the Martinez and Ruiz, who do not have a criminal history, should be able to be free on bond before their trial, specifically citing Martinez’s gunshot wounds — so she can get proper medical care.

The motion to dismiss the charges against Martinez and Ruiz did not provide an explanation.

The court hearing is scheduled for 4 p.m. where the judge will likely grant that the charges are dismissed.

The U.S. Attorney’s Office of the Northern District of Illinois released the following statement.

“As the United States Attorney has stated repeatedly in his public comments, the U.S. Attorney’s Office is constantly evaluating new facts and information relating to cases and investigations arising out of Operation Midway Blitz, the largest ever law enforcement surge in the Northern District of Illinois. This continuous review process applies to all matters—whether charged or under investigation. It helps ensure that the interests of justice are served in each and every case, and that those cases that are charged are appropriately adjudicated through our federal court system.”

The charges were dismissed. I had intended to remark on these events but was waiting for a “hook”. None was forthcoming so I’ll just make a few observations here.

I find these events horrifying and baffling at many levels. I believe in enforcing the law routinely and dispassionately but what I’m seeing is not the rule of law but anarchy and it goes back for years.

Obstruction of justice is lawless behavior. Ramming law enforcement vehicles or blocking them in is lawless behavior. “Rough justice” is lawless behavior. Shooting a woman who is no threat and has done nothing wrong is lawless behavior. Law enforcement officers lying about their own behavior is lawless behavior.

Dismissing all charges against Ms. Martinez and Mr. Ruiz without filing charges against the law enforcement officers involved is lawless behavior. You can’t have it both ways.

And on top of it all we have activists rather than journalists with little or no real reporting going on. We don’t actually know what happened. We do know what the defense attorneys said but that is pretty flabby reporting.

At Axios Barak Ravid, Colin Demarest, and Dave Lawler report on the reaction of Ukrainian President Zelensky to the Trump Administration’s latest proposed peace plan:

Ukrainian President Volodymyr Zelensky told U.S. Army Secretary Dan Driscoll on Thursday that he’s willing to work with the Trump administration on its new plan for peace in Ukraine, U.S. and Ukrainian officials tell Axios.

Why it matters: The plan calls on Ukraine to make enormous concessions, including handing over territory to Russia that Ukraine currently controls. But rather than reject it outright, Zelensky agreed to negotiate — and his office said he expects to discuss it with President Trump in the coming days.

but

• The plan includes elements that are seen as highly Moscow-friendly, such as limitations on the size and capabilities of the Ukrainian military after the war, according to a Ukrainian official.
• Ukraine has repeatedly rejected such proposals in the past.

I’m not particularly sanguine about this latest plans chances for just those reasons.

I’m still waiting for someone to propose a plan that allows Ukraine to prevail under the terms that President Zelensky has argued for. I’ve been waiting for two years.

As I see it there are several possible ways of looking at the conflict:

1. As long as it weakens the Russians, who cares how long the conflict drags on? The longer the better.
2. Russia’s invasion of Ukraine was contrary to its commitments under the UN Charter and we should oppose it.
3. The above plus “whatever it takes, however long it takes.”
4. It’s none of our business.

My view is a variant of #2 above. I disagree with #1—it’s just too cynical and amoral. I believe #3 is impractical. I suspect that the longer the war drags on the more Americans will believe #4.

I haven’t posted much on this subject because I find it distastefully sordid. Now that a rarely nearly-unanimous Congress has passed a law calling for the federal government’s Epstein files to be made public, possibly with some redactions, I thought I’d comment on it.

Although at the time of this writing no court cases had been filed opposing the release of the files, I expect there to be some and I don’t know what the ultimate outcome of those will be. It is my understanding that some of the files are grand jury documents that aren’t supposed to be publicized.

Personally, I have no problem with the release of the files but I doubt they’ll be the “smoking gun” that Democrats seem to be longing for and if they are they’ll be a gun that fires in both directions. At his Substack Matt Taibbi writes:

The list of high-ranking politicians from both parties who traveled with or took money from Epstein — Donald Trump and Bill Clinton included (what was the latter’s “humanitarian” visit to Siberia with him about?) — boggles the mind. A character like Epstein can only thrive in a world where law enforcement and intelligence are fully intertwined with financial and sexual corruption, to the point where one has to entertain the idea that significant numbers of politicians are compromised, perhaps even in a form of systemic blackmail. That isn’t an easy thing to believe. In the words of the disgraced and disgraceful writer Michael Wolff, whose ostentatious presence at the middle of this story casts doubt on all of it, Epstein represents “the kind of insiderism that is mostly just a figment in outsiders’ fantasies.”

Since my “last delusions” about public figures were shattered more than a half century ago I won’t be at all surprised by anything that might emerge from those files. Or nothing for that matter.

In his most recent Substack post economist Scott Sumner affirms a point I’ve been making here:

Put simply, societies become progressively richer by producing lots of stuff that rich people like—things that are “unaffordable” to average people. Places that understand this (Switzerland, Singapore, UAE, etc.), do much better than places that obsess with producing lots of stuff for poor people. If you don’t want to gentrify slums, then you’ll end up with lots of slums.

and especially:

America has roughly 8 times as many jobs as Canada because we have roughly 8 times as many people. And that’s true even if 5% of our workforce is unemployed. Bring in 10 million more workers from overseas, and we’ll end up with roughly 10 million more jobs and still have 5% unemployment. Similarly, even if 10% of homes are empty or owned by foreign investors, if you build another 10 million homes, you’ll have roughly 10 million more homes occupied by American residents. Gimmicks like rent control and 50-year mortgages don’t solve the problem, you need more housing output.

Many cities require developers to set aside a certain percentage of new housing units for “low income” buyers or renters. These regulations are effectively a tax on new construction and reduce the output of new homes. Because output equals abundance equals affordability, housing affordability mandates effectively make housing less affordable.

The “law” forms the title of his post: “Output is abundance is affordability”. “Output” means more stuff. More houses. More cars. Not charging more for the same number of houses, cars, etc. That latter is the weakness of trying to transition to a service economy. You don’t become richer as a society that way but you do end up with shortages of stuff like houses that can’t be imported, particularly if regulations limit the pace at which the stuff, e.g. houses, can be produced.

Shorter: we need more output.