At RealClearWorld Matthew Goodman reports on the proceedings of the annual China Development Forum (reprinted from cSIS):

The elaborate two-day affair bringing together scholars, business people, and officials from China, the United States, and Europe exuded confidence about China’s economic prospects, internal stability, and global position. Coming on the eve of the 70th anniversary of the People’s Republic of China, this bravado was not surprising. But behind the outer show, I sensed a deeper anxiety in the Chinese elite. This has important implications for U.S. interests.

The question that occurred to me was whether the clear skies he observed during his stay reflected success by the Chinese officials on the environmental front or a flagging economy and how one would go about distinguishing between the two using indirect evidence?

Read the whole thing.

There’s an interesting post at the American Institute of Economic Research in which Richard Salsman argues that the yield curve is a reliable predictor of recessions in the United States. The “yield curve” is the relationship between maturities and interest rates. Here’s his thesis:

Over the past half century in the U.S., yield-curve inversions have been important because they’ve reliably predicted all seven U.S. recessions, beginning roughly a year in advance (see table). Those recessions, of course, have been closely associated with bear markets in stocks and bull markets in bonds. It matters a lot – or it should, for those who care about portfolios.

The yield curve’s forecasting record since 1968 has been perfect: not only has each inversion been followed by a recession, but no recession has occurred in the absence of a prior yield-curve inversion. There’s even a strong correlation between the initial duration and depth of the curve inversion and the subsequent length and depth of the recession.

Lags (the duration between the inversion of the yield curve and the beginning of the recession) have varied between weeks and years which to my mind throws a bit of cold water on the hypothesis. It also makes me wonder to what degree the yield curve is actually a measurement of the financialization of the economy. The post has lots of interesting graphs.

The yield curve inverted in May.

At the Wall Street Journal the editors remark on the anniversary of the People’s Republic of China:

China’s Communist Party on Tuesday marks the 70th anniversary of its 1949 revolution, and the fireworks and military parades will celebrate the country’s rise to become the world’s second largest economy. Yet there is no denying that this anniversary comes with a paradoxical unease about China’s place in the world. China is more powerful but less free than it was a decade ago and the world views its external aggression with growing concern.

China’s rise since Deng Xiaoping set the Party on the path of market reform 40 years ago has few historical parallels. China has taken advantage of open markets in the West, and the lure of its domestic market of 1.4 billion people to foreign investors, to lift hundreds of millions out of poverty and become an export and increasingly a technology behemoth. The U.S. and the world have for the most part benefited from this development. Imagine the alternative if China had remained stagnant and its people sought to emigrate in the millions.

The second to last sentence is an enormous oversimplification. What seems to be the case is that a very small number of people in the United States and “the world” have benefited enormously from China’s participation in the global economy, a somewhat larger group has been hurt enormously (those who’ve lost their jobs), a much broader group has been hurt somewhat, and a broad group has been helped a little. In econspeak most of the economic surplus has been captured by a small number of very rich people while most of us have not seen a great deal of benefit. I trust it is the same in China although the results seem to show that moving labor resources from relatively nonproductive subsistence agriculture to manufacturing, in some cases by force, has had a beneficial effect on China as a whole. There aren’t nearly as many people who are desperately poor there as there used to be.

The editors express a preference for closing the barn door after the horses have already bolted:

We are not among those who believe that China’s economy must be decoupled from America’s or that China must be “contained” a la the Soviet Union. At least not yet.

That statement would be more credible if China had ever lived up to its international commitments in full. It hasn’t. As I’ve said before, the authorities there write a heckuva press release which seems to be enough for most Western leaders including the editors of the WSJ.

I think this is naive:

The Party’s larger challenge is the aspirations of its own people. The attempt to craft a hybrid part-market, part-socialist economy has saddled China with rampant corruption, endemic pollution and unsafe food. Worse is coming as the one-child policy the Party enforced for decades burdens China with a rapidly aging population.

China’s 2 million man military is mostly turned inwards, better prepared to control China’s populace than it is to defend China against invaders. The greatest challenge for China is whether the PRC will use the force it has at its command to maintain its own power to China’s detriment. The greatest challenge for the United States is whether at this late date there is any will to do anything other than just put up with China’s routine violations of its international agreements.

October 1, 2019 marks the 70th anniversary of the People’s Republic of China.

It is presently around 10:00pm there. I would be surprised if there were not some decisive action in Hong Kong very, very soon.

I just realized that I may have used a term that is not generally understood. “Special pleading” is setting up standards, principles, or rules and then applying them to people you don’t like while finding one pretext or another for not applying them to people you do like. It is a logical fallacy.

I do not think that there is good or acceptable corruption. I think there is only corruption and it is all bad. The only question is to what lengths we should be willing to go to root it out.

I think it is possible to distinguish between executive logrolling and legislative logrolling or between domestic executive logrolling and international executive logrolling. But if you condemn an exchange of favors between heads of state, you should be prepared to delineate precisely what you are opposing and take care not to rule out negotiations between heads of state altogether. I do not think that receiving remuneration for you, your family, or your friends is one whit better (or worse) than receiving help with your re-election campaign.

There’s an interesting article at CityLab by Kriston Capps on the implications of national rent control proposals being put forward:

The prospect of a national rent control policy raises the question of whether one size could fit all of America’s housing markets—not just Seattle and New York but also Des Moines and Oklahoma City. It imagines a perpetual crisis of escalating rents for tenants and awesome returns for landlords, when just a decade ago, the opposite was true across the entire country. Indeed, home values still haven’t recovered from the recession everywhere.

A national rent control policy also raises questions about which problems Congress wants to solve. Is it that housing is unaffordable, so we need to build more of it, while protecting vulnerable renters in those neighborhoods where construction is happening? Or is it something larger about the nature of capitalism and the role of shelter as a human right?

While it would be fascinating to dig up the statements from people who object to tariffs but support such broad rent control measures (I assume there are many), I only have one life to live so I won’t dig them up for entertainment.

I would make a number of observations, most of which I would assume are controversial:

• There is no such thing as a national housing crisis. There are hundreds or thousands of state or local housing crises and the safest, best way of addressing them is at the state or local level. Until recently you could buy a house for $1 in Gary, Indiana.
• To whatever extent there is a national housing affordable housing crisis it is a direct consequence of our failure to enforce our borders. Illegal migrants searching for work tend not to seek out the most affordable housing markets but those that are already the most expensive—they’re where the jobs are.
• The proposals so far only address institutional landlords who account for 17% of the market. Is there any evidence that they’re primarily responsible for high rents? I suspect it’s exactly the opposite. There must be some economies of scale in managing multiple properties and at least some of the economic surplus should go to the renters.
• Does national rent control give the most bang for the buck or is just the most centralized solution? There are other solutions to whatever “crisis” exists, e.g. more housing. One way of accomplishing that was used in Toronto a number of years ago which required every new construction to include residential space, commercial space, and parking.

This paragraph in Frank Miele’s piece at RealClearPolitics caught my eye:

By staking an impeachment claim on the phone call President Trump held with the Ukrainian president, the Democrats in Congress are essentially declaring that the president doesn’t have the power to negotiate with foreign leaders, he does not have authority as commander-in-chief to make deals, and he can neither cajole nor chide foreign nations to do our bidding without being brought to heel by the terrible oversight powers of Lord Congress.

I think that Mr. Miele is underestimating the latitude the Congress has in impeachment but, even assuming he’s right, who would have standing to challenge the Congress’s actions? Claiming that the president has the authority to challenge the Congress in court or even that the Senate has the authority to challenge the House opens a can of worms I do not think we wish to confront. Where would it end?

No, the big problem facing the House Democrats is how do they hold onto their majority if they engage in what is widely seen as a purely partisan impeachment? It doesn’t matter if they have the full support of the people of the New York 15th District. What matters is districts they won narrowly or whose incumbents are unpopular in their own districts and there are at least fifty of those, more than enough to flip the House.

Last night my wife and I attended Chicago Lyric Opera’s production of Giacomo Rossini’s 1813 opera, The Barber of Seville, one of the greatest works in the operatic repertory, not performed as frequently as some lesser operas, possibly because singing it is so demanding. This was Lyric Opera’s opening performance of its 2019-2020 season. Lyric sent us a notification that it was black tie so my wife wore a formal; I wore a tux. It’s the first time I can recall dressing so formally for a Lyric production and I’ve been going to Lyric productions for 40 years, for most of which time I’ve held a season subscription.

The production itself was a revival of one we’ve seen before. The sets and costumes were quite traditional. It’s a good production. To understand the remainder of my comments I have to explain a little of the history of opera. In 18th century Italy there were two broad types of opera: opera seria, dealing with serious subject—tales of gods and heroes, derived from stories of classical antiquity or mythology and intended for a noble audience, and opera buffa, comic operas with characters drawn from everyday life. All contemporary operas are opera buffa. Barbiere is an opera buffo.

Last night’s performance of Barbieri was undoubtedly the most buffo I have ever seen and I have seen nearly a dozen different productions. It was extremely broad. By and large the acting was pretty good. I thought that Adam Plachetka’s Figaro owed more to Eastern European clowns than the Italian Commedia dell’arte Arlecchino character whom he embodies. Lawrence Brownlee’s portrayal of Almaviva/Lindoro/Doctor Alfonso was brilliantly funny.

Vocal standouts were Marianne Crebassa as Rosina (although I thought she had a few problems with breath support here and there) and veteran performer Alessandro Corbelli as Dr. Bartolo. With the exception of Sig. Corbelli the cast was quite young. Mathilda Edge (Berta) was particularly notable as was Krzysztof BÄ…czyk (Don Basilio).

All in all it was an entertaining evening at the opera although not at the level of excellence of productions we have seen at Lyric in the past.

One personal note about Barber. The recessional at my wife’s and my wedding was the finale from the Barber of Seville, Amor e fede eterna, si vegga in noi regnar! (“may love and eternal faith reign eternally”), so the opera holds a special place in my heart. There is a good performance here if you’re curious.

The Critics

At Chicago Tribune Howard Reich writes:

Lyric Opera of Chicago launched its 65th season on Saturday night with a laugh.

Quite a few of them, actually, thanks to a wickedly funny, elegantly sung, cleverly directed production of Rossini’s “The Barber of Seville.”

He gives it four stars. Assuming he means of five, he must have attended a different opera than we. I would have given it two and a half to three although I did agree with this:

The production’s other vocal tour de force came from Mathilda Edge, a first-year Ryan Opera Center member making her Lyric debut as Berta, Rosina’s governess. Her big moment comes in “Il vecchiotto cerca moglie,” in which she ponders the madness of love. Soprano Edge yielded not only an enormous sound with remarkable point but a coyly understated humor that cut against the hysterics that preceded and followed her.

Brava.

Wynne Delacoma’s assessment at Sun-Times was a little closer to the mark:

It took a while for Rossini’s usually frothy comedy “The Barber of Seville,” which opened Lyric Opera of Chicago’s 65th season Saturday night, to achieve liftoff. Despite stellar voices and airy sets glowing with the luminous sunshine, cool stone colonnades and filigreed wrought iron of 18th century Spain, the first half of the performance felt earthbound. After intermission, however, the pace seemed to quicken in this revival of a previous Lyric production, new in 2014 and originally directed by musical theater veteran Rob Ashford. By the final, rollicking chorus celebrating the triumph of young love, hearts were soaring, both onstage and in the audience.

At Chicago Theater and Arts Jodie Jacobs gives 3½ stars to “top tier voices and leads who know how to act”.

The editors of the Wall Street Journal have focused their collective gimlet eye on states that were notably poorly run and, of course, Illinois immediately came to mind:

Economists have been surprised by the strength of consumer spending, and one reason may be that income growth has been faster than they thought. The BEA revised personal income growth upward in most states, especially in the West and Midwest. Incomes were revised up 4.2% in Colorado and Washington, 3.9% in Utah and 3.1% in Idaho.

One not so surprising exception is Illinois where growth was revised down 1.2%. Its neighbors Indiana (1.5%), Michigan (2.5%) and Wisconsin (2.6%) experienced modest upward revisions. Illinois incomes have grown faster over the last year (3.7%) than during the late Obama years amid an uptick in manufacturing, but the state still lags in the Great Lakes region.

Manufacturing earnings in Illinois have increased 4% over the last four quarters, but workers and businesses have been fleeing. Last year 80% of Illinois cities lost population, according to the Illinois Policy Institute. Swelling worker pension obligations are driving up property taxes, and some towns are imposing special fees to pay for public-safety pensions. Springfield is still a wholly owned subsidiary of the government-worker unions.

If I am ever at a loss for good things to say about Illinois, I recall that we can always serve as an object lesson.

It’s always puzzled me what the endgame strategy for Illinois is. I suspect it involves politicians boogeying out of Illinois, one step ahead of peasants armed with pitchforks and torches.