In his latest New York Times column David Brooks defends capitalism against socialism:

I came to realize that capitalism is really good at doing the one thing socialism is really bad at: creating a learning process to help people figure stuff out. If you want to run a rental car company, capitalism has a whole bevy of market and price signals and feedback loops that tell you what kind of cars people want to rent, where to put your locations, how many cars to order. It has a competitive profit-driven process to motivate you to learn and innovate, every single day.

Socialist planned economies — the common ownership of the means of production — interfere with price and other market signals in a million ways. They suppress or eliminate profit motives that drive people to learn and improve.

It doesn’t matter how big your computers are, the socialist can never gather all relevant data, can never construct the right feedback loops. The state cannot even see the local, irregular, context-driven factors that can have exponential effects. The state cannot predict people’s desires, which sometimes change on a whim. Capitalism creates a relentless learning system. Socialism doesn’t.

The sorts of knowledge that capitalism produces are often not profound, like how to design the best headphone. But that kind of knowledge does produce enormous wealth. Human living standards were pretty much flat for all of human history until capitalism kicked in. Since then, the number of goods and services available to average people has risen by up to 10,000 percent.

If you’ve been around a little while, you’ve noticed that capitalism has brought about the greatest reduction of poverty in human history. In 1981, 42 percent of the world lived in extreme poverty. Now, it’s around 10 percent. More than a billion people have been lifted out of poverty.

You’ve noticed that places that instituted market reforms, like South Korea and Deng Xiaoping’s China, tended to get richer and prouder. Places that moved toward socialism — Britain in the 1970s, Venezuela more recently — tended to get poorer and more miserable.

You’ve noticed that the environment is much better in capitalist nations than in planned economies. The American G.D.P. has more than doubled since 1970, but energy consumption has risen only modestly. America’s per-capita carbon emissions hit a 67-year low in 2017. The greatest environmental degradations are committed by planned systems like the old Soviet Union and communist China.

The Fraser Institute is a free-market think tank that ranks nations according to things free-market think tanks like: less regulation, free trade, secure property rights. The freest economies in the world are places like Hong Kong, the U.S., Canada, Ireland, Latvia, Denmark, Mauritius, Malta and Finland. Nations in the top quartile for economic freedom have an average G.D.P. per capita of $36,770. For those in the bottom quartile, it’s $6,140. People in the free economies have a life expectancy of 79.4 years. Those in the planned economies have a life expectancy of 65.2 years.

Over the past century, planned economies have produced an enormous amount of poverty and scarcity. What’s worse is what happens when the political elites learn what you can do with that scarcity. They turn scarcity into corruption. When things are scarce, you have to bribe government officials to get them. Soon, everybody is bribing. Citizens soon realize the whole system is a fraud. Socialism produces economic and political inequality as the rulers turn into gangsters. A system that begins in high idealism ends in corruption, dishonesty, oppression and distrust.

I believe he’s probably communicating better by using the words “capitalism” and “socialism” but they don’t really convey what’s actually happening here in the United States. Whether the rich become powerful or the powerful become rich, it’s really the same battle. Planned economy or market economy? Both Venezuela-style planned economies and crony capitalist ones like ours are centrally planned, the former for the benefit of government officials and the latter for the benefit of big companies.

Don’t kid yourself. Neither Democrats nor Republicans have a smidgeon of problem with crony capitalism. The evidence for that is the number of politicians of both parties who have become rich over a lifetime of alleged public service. It is simply not credible that for a politician to begin a life in elected office with a negligible net worth and amass a fortune in the tens of millions over 30 years of holding office without political corruption. Or leave political office with few if any other credentials and receive a million dollar salary without what you’re peddling being influence.

Big companies are able to twist the power of government against their competitors. The return on investment of that is fantastic. For a few thousand in political contributions or a few million in jobs given to former politicians or government employees you can realize billions. There are thousands of examples of how this works including extending copyrights to absurd lengths, as Disney has managed to do, or getting regulations tailored so they help you and hurt your competitors.

For many of the ills in our society, from low levels of capital investment to income inequality, you need only look at the consolidation that’s taking place in practically every sector.

During the financial crisis and “Great Recession”, the number of individuals enrolled in the food stamp program AKA SNAP (“Supplemental Nutrition Assistance Program”) skyrocketed to the largest in history. By design a counter-cyclical program, as such it makes some macroeconomic sense. Proponents of the program point to improved health and reduced food insecurity for benefit recipients. Don’t look for the editors of the Wall Street Journal among them:

Judging by the rhetoric, you’d think President Trump was shutting down Great Depression bread lines. “The Trump administration,” Senate Minority Leader Chuck Schumer said, “is driving the vulnerable into hunger just as the Christmas season approaches.”

Humbug. Two incongruous facts: With the U.S. unemployment rate now at 50-year lows, there are seven million job openings for only six million job seekers. Yet as of last year 2.1 million potential hires—specifically, adults age 18 to 49, able-bodied, without dependents—were receiving food stamps despite not working.

One reason is that basic work requirements have been waived into oblivion. The 1996 welfare reform said that childless adults generally had to work or train at least 20 hours a week to qualify for food stamps. Otherwise, they’re supposed to be restricted to three months of benefits in a three-year period.

States can get this requirement waived, however, for areas that are economically struggling. This is defined as 10% unemployment, with some catchall language for places otherwise lacking sufficient jobs. Flimsy standards have prevailed. The Foundation for Government Accountability calculated in August that the average jobless rate in waived areas—more than 1,100 jurisdictions across 33 states—was 4.5%. “Nearly half,” the report said, “have unemployment rates at or below four percent.”

This makes the timing right to retighten the criteria.

I’m of mixed mind on this. On the one hand, tens of millions of people on SNAP more than was the case in 2007 after a decade of economic expansion is, to say the least, odd. The total cost of the program is around $70 billion per year. The fraud and erroneous payments in the program are estimated to be between $1 billion and $3 billion per year. It is not serving a Keynesian purpose. The claim is that it discourages work.

On the other hand, $70 billion a year is a flyspeck in the federal budget and SNAP is an effective program as federal programs go.

Just how much should we subsidize able-bodied adults who just won’t work?

The spitting contest in Washington continues. The editors of the Wall Street Journal comment on the House Intelligence Committee’s apparent use of NSLs to secure phone call metadata of Rudy Giuliani, Devin Nunes, and others and then disclosing them in their report, an express violation of the law:

The impeachment press is playing this as if the calls are a new part of the scandal, but the real outrage here is Mr. Schiff’s snooping on political opponents. The Democrat’s motive appears to be an attempt to portray Mr. Nunes, a presidential defender and Mr. Schiff’s leading antagonist in Congress, as part of a conspiracy to commit impeachable offenses.

“It is, I think, deeply concerning, that at a time when the President of the United States was using the power of his office to dig up dirt on a political rival, that there may be evidence that there were members of Congress complicit in that activity,” Mr. Schiff told the press on Tuesday. Complicit in what? Doing his job of Congressional oversight? Talking to Mr. Trump’s lawyer to get a complete view of the Ukrainian tale? Apparently Mr. Schiff now wants to impeach Members of Congress too.

This is unprecedented and looks like an abuse of government surveillance authority for partisan gain. Democrats were caught using the Steele dossier to coax the FBI into snooping on the 2016 Trump campaign. Now we have elected members of Congress using secret subpoenas to obtain, and then release to the public, the call records of political opponents.

That’s a felony and, ironically, an impeachable offense for which no one will ever be scolded let alone impeached. Complaining that your political opponents are acting in a dangerous and lawless manner becomes less credible when you’re doing it yourself.

William Galston’s latest Wall Street Journal column relies on that “prevailing wisdom” I spoke of in an earlier post:

Let’s start with a definition. Suppose that for each issue there’s a continuum from one extreme to the other, defined by a scale from 1 to 5. There would be a meaningful center on an issue if more people placed their views at 3 on the scale than at either end.

By this standard, people with “centrist” views constitute at least a plurality—meaning the largest faction when there is not a majority—on many questions at the heart of today’s political contestation, starting with political identity.

Asked to place themselves on a right-to-left spectrum, 43% of respondents opted for the center, compared with 34% for the right and 23% for the left. Overall, there’s a basis for saying that the U.S. is a centrist country that leans modestly to the right.

This fact coexists with a significantly polarized party system. Sixty-five percent of Republicans identify with the right, 27% with the center, and only 8% with the left. By contrast, 42% of Democrats identify with the left, and the same share with the center. One major party has a dominant ideology while the other is divided down the middle, a straightforward explanation for the shape of the current contest for the Democratic presidential nomination.

Note that, unlike Nationscape he’s using an affiliational yardstick rather than the one they’re using. That’s circular—he’s assuming what he claims is true. Whether it in fact is true is important.

But he uses it to reach exactly the same point we reached the other day:

On some issues, however, rather than a dominant center, we find a national consensus across partisan and ideological lines. Fifty-eight percent of Republicans, 80% of Democrats and 67% of independents believe that government should “do more” to provide health care and a secure retirement for elderly Americans, a political reality that Donald Trump understands but Paul Ryan did not. The odds are that when these programs face their long-predicted financial crunch, politicians will have to focus on funding rather than cutting benefits. Similarly, the First Amendment stands out as a core tenet of America’s secular faith. More than 60% of Republicans, Democrats and independents believe that the right to free speech is nearly absolute, except when a speaker advocates violence.

I think there’s also a difference between what rank-and-file Democrats and Republican believe and what elected officials of each party believe.

At Bloomberg Barry Ritholtz scoffs at the NRF’s figures for Thanksgiving weekend that I expressed skepticism about yesterday:

I would bet my house that we didn’t have a 16% year-over-year sales gain this past weekend. I don’t do forecasts, but with inflation running at less than 2%, economic growth running at just a hair above 2% and employment slowing, I wouldn’t be surprised if we have real sales gains of between 1% and 2%. Then again, I don’t run a trade organization designed to promote and hype the retailing industry, a sector that has been under immense pressure during the past decade. It’s not called the retail apocalypse for nothing.

It is not just NRF sales reports that are suspect, but its holiday shopping forecasts as well: An earlier NRF survey of shoppers suggested retail sales for the period would rise “between 3.8 percent and 4.2 percent over 2018 for a total of between $727.9 billion and $730.7 billion.”

But this too is simply a guess. Asking people how much they spent last year (who can remember?) and how much they intend to spend this year (who really knows in advance?) gives you very little insight into their actual spending. Indeed, based on the track record of this methodology, the odds greatly favor this forecast being wrong.

The reason I was skeptical is that RetailNext and Sensormatic are measuring real, tangible things. That’s a lot different than the sentiment surveys the NRF is using.

Holman Jenkins’s latest Wall Street Journal column about environmental policy opens as a political diatribe but, once you get past the fulmination, arrives at a point that approximates my view:

If stated properly, the “scientific consensus” would run as follows: climate models teach us to expect some warming from human-caused atmospheric CO2 increases, but disagree about how much. It’s hard to make cost-benefit judgments on such a basis, but happily the Green New Deal makes it easy—it would cost a lot of money and accomplish nothing since U.S. emissions are just 14% of the total and shrinking. India and China, not the U.S., will determine the fate of climate change.

Cost-benefit analysis also tells us a bunch of things that might be worth doing even in light of the uncertainties. A tax reform based on a revenue-neutral carbon tax could make our tax system more efficient and pro-growth. Government investment in basic research tends to have a high payoff, and battery research is a particularly attractive opportunity. Rethinking nuclear power and regulation is another area of huge potential. Safer and cheaper nuclear technologies continue to advance on the drawing board even in today’s inhospitable political environment.

And guess what? All the above would be easier to sell to other countries than Green New Deal masochism. Voters would readily gobble up new energy technologies and tax models that would make their societies richer and stronger.

Let’s put it another way. You may coherently support measures that reduce carbon emissions or you may oppose an increase in nuclear power generation but, if you do both, you must do so on a cost-benefit basis. I think that more power generated by small modular nuclear reactors, particularly if they’re based on thorium, is something we should be pursuing with all due haste.

I would quibble about one point in Mr. Jenkins’s formulation. If the models are, indeed, correct it doesn’t matter whether or in what proportion human-caused atmospheric CO₂ increases. The effects will be felt regardless.

The editors of the Wall Street Journal’s critique of the House’s impeachment inquiry report fulminates on for quite a while before making this observation:

The report’s summary sentence reveals the weakness of its case with overstatement: “The president placed his own personal and political interests above the national interests of the United States, sought to undermine the integrity of the U.S. presidential election process, and endangered U.S. national security.”

Yet every President seeks some political advantage in pursuing foreign policy. That includes Barack Obama when he asked Dmitry Medvedev to tell Mr. Putin to go easy on missile defense until after the 2012 election.

As for undermining election integrity, that was Bill Clinton when he vacuumed foreign campaign contributions from the Riadys and multiple other foreigners in 1996. Or Hillary Clinton in 2016 when her campaign financed Christopher Steele to spread Russian disinformation on Mr. Trump to the media and FBI.

Mr. Trump, in his reckless way, asked President Zelensky for the “favor” of investigating Joe Biden and tried to delay military aid. But as Senator Ron Johnson relates in his recent letter that is a more even-handed account of events, Mr. Trump’s attempts were resisted across Washington and ultimately failed.

None of this undermined elections or “endangered” U.S. national security because there was no investigation and the aid was never withheld. Even if aid had been withheld, that would merely have put U.S. policy back to where it was when Mr. Obama denied Ukraine lethal military aid for several years until Mr. Trump provided it.

As I have been saying since the Ukraine phone call first made the national news, I think it is incumbent on the House Democrats to draw sharp lines about the behavior for which they think that Mr. Trump should be impeached. If that line is political gain, they need to distinguish between the political gain sought by Mr. Trump and that sought by all other presidents in their negotiations with foreign governments.

If they fail to do that they are, essentially, criminalizing politics. I do not support President Trump. I did not vote for him in 2016. I do not plan to vote for him in 2020. I not think that asking President Zelensky to investigate the Bidens was proper in that context. But we need to be very, very careful here lest we set precedents that should not be set.

Conor Sen is right in his observations at Bloomberg that faster economic growth will require increased productivity:

Economic growth is a function of two factors: more hours worked and how much more efficient, or productive, an economy is. Although the U.S. now has an aging population, a falling birthrate and less immigration than in the past, the level of job growth and hours worked during the past decade has been robust because of just how high unemployment was. In this environment, the fear that robots would displace workers proved unfounded.

It’s now been 10 years since unemployment peaked at 10% in October 2009. Since that time, total employment in the U.S. has increased by 20 million. During that same period, the number of unemployed workers has fallen by 9.5 million, from 15.3 million to 5.8 million. In other words, about half of all job growth in the past decade has come from getting unemployed people back to work.

So future economic growth is probably going to have to come from somewhere other than the unemployed. Maybe a tight labor market can draw more people into the workforce — we’ve seen some of that during the past few years — but at some point that hits a limit, too. Ultimately, what we need is faster productivity growth.

I don’t know what Mr. Sen learned in school but back in the olden days when I took economics classes we were told that increases in productivity require investment. That can come from two source: the government and individuals in the form of education and businesses in the form of new equipment and processes.

The increase in investment in education over the last 30 years has been impressive—more than 375% in real terms. Right now the per student spending on education is the highest in history:

Given lagging productivity growth despite all of that educational spending, I don’t think it’s much of a stretch to conclude that there’s little or no relation between educational spending and productivity growth.

That means that, if we are to see more economic growth, businesses will need to invest more. I have been harping about that since the early Aughts. Businesses just don’t see the need or at least the benefit. Incentives will need to change.

Globally, the struggle to reduce carbon emissions isn’t working. Every decrease in the United States and Europe is more than matched by increases in China and India. I found Brad Plumer’s New York Times article on that interesting but this passage caught my attention:

In the United States, carbon dioxide emissions are on track to fall roughly 1.7 percent in 2019, thanks to a sharp decline in coal-fired electricity. Still, this year’s drop in United States emissions isn’t expected to be enough to offset the 2.8 percent increase in 2018, suggesting that the country is struggling to control emissions at a time when the Trump administration has moved to roll back Obama-era regulations on carbon pollution from vehicle tailpipes and power-plant smokestacks.

The European Union’s emissions are also on track to fall 1.7 percent this year as the continent’s emissions-trading system helped push roughly one-fifth of its coal power off the grid. At the same time, Europe also saw an increase in demand for diesel and aviation fuel, indicating that policymakers are failing to curtail emissions from cars, trucks and planes even as they lay out big plans to promote electric vehicles.

There’s something wrong with that passage and I can’t quite put my finger on what.

The figures on China’s increases in carbon omissions (26% of the total, growing at .9% per year compared with the U. S.’s 14%, declining at 1.7% per year) understate China’s exacerbation of whatever problem carbon emissions pose. China isn’t just promoting increased emissions at home. It’s doing so abroad as well, 300 coal plants in Turkey, Vietnam, Indonesia, Bangladesh, Egypt and the Philippines.