I sometimes do not understand what impels people to say the things they do. The editors of the Washington Post decry the situation in Hong Kong:

THE LESSONS of recent events in Hong Kong start with the fact that an enormous number of people took to the streets in peaceful demonstrations against a rollback in the territory’s guarantees of freedom and autonomy from China. The very size of the protests that filled Hong Kong’s downtown, the largest in a generation, is a powerful reminder this is not a splinter movement but the mainstream speaking loud and clear.

Another lesson is that Hong Kong’s protesters are growing angrier and more distraught than they were before. In past years, it often appeared the opposition in Hong Kong was unfailingly orderly, simply asking China to fulfill its original promise to protect Hongkongers’ freedoms. There was little public support for outright independence from China. But the latest demonstrations reflect a new edge of distrust and wariness that should worry the rulers in Beijing.

The militancy is a direct result of China’s gradual but inexorable tightening of the screws on Hong Kong, most recently through a proposed extradition law that would have undermined the territory’s justice system. China’s leaders, who supervise the Hong Kong executive, have no one but themselves to blame for the opposition’s hardened attitude.

closing by proclaiming

The young people must be careful not to give the Chinese Communist Party leaders in Beijing, or their underlings in Hong Kong, an excuse for more repression. Violence and vandalism invariably play into the hands of the Chinese leaders, who take fright at all signs of protest and democracy. In today’s world, the students can be just as powerful hurling words as smashing windows.

The larger conclusion to be drawn is that China’s leaders should abandon their old thinking. Repression will ultimately fail and generate more resistance. China can’t grind down Hong Kong for another generation, and it would be terribly counterproductive to try.

I can’t tell whether that’s wishful thinking or a free flight of fancy. 23 years ago the Chinese needed Hong Kong and they needed the good will of Europe and the United States. Trade with the United States was still severely constrained by China’s trading status. It was not a member of the World Trade Organization. Its factories were still being built largely by the Germans and many of its people were desperately poor. It did not have a modern military.

None of those is the case now. China can stand on its own and is quite eager to do so. It recognizes that the Europeans and many in the United States. don’t really care what they do so long as the supply chains remain open. The Chinese authorities should be concerned all right. They should be concerned that they no longer have the control over the flow of information from Hong Kong to the balance of China as they a generation ago and China’s newly-prosperous middle class may be infected by Hong Kong’s comparatively democratic and liberal system.

The Chinese authorities need one system to prevail across China, Hong Kong included, much more than they need Hong Kong or foreign good will and there’s nothing the people of Hong Kong can to to prevent it.

Expect a crackdown.

I wish the editors of the Wall Street Journal would devote less energy to figuring out whether Trup or Obama has helped more ordinary working people:

Judging from last week’s debate, Democrats running for President see America as a Dickensian nightmare of inequality. It’s the best of times for millionaires and billionaires, and the worst of times for everybody else. Time to wake up from the Barack Obama economy, folks, and admit how many more Americans are prospering from the faster economic growth and tighter labor market after the policy changes of 2017.

Judging from last week’s debate, Democrats running for President see America as a Dickensian nightmare of inequality. It’s the best of times for millionaires and billionaires, and the worst of times for everybody else. Time to wake up from the Barack Obama economy, folks, and admit how many more Americans are prospering from the faster economic growth and tighter labor market after the policy changes of 2017.

[…]

Nearly one million more blacks and two million more Hispanics are employed than when Barack Obama left office, and minorities account for more than half of all new jobs created during the Trump Presidency. Unemployment among black women has hovered near 5% for the last six months, the lowest since 1972, and a mere 3.5% of high school graduates are unemployed.

But what about Senator Harris’s assertion that folks are stringing together jobs to make ends meet? About 5% of Americans hold more than one job, and this rate has held relatively constant since 2010. Yet there are now 1.3 million fewer Americans working part-time for economic reasons than at the end of the Obama Presidency.

and lot more energy to answering two questions:

1. Do working people need help?
2. If so, what’s the best way to help them?

I think it’s pretty obvious that ordinary working people do need help and what they need most are relief from regressive state and local taxes and less competition for jobs from workers from other countries, whether they remain in those countries or are brought into this one.

But I’m open to other solutions than those I’ve been prescribing. What are your answers to the questions above?

I haven’t had the energy to post my pictures of the annual Fourth of July Sauganash parade but I wanted to share this one with you. We had a prominent guest this year. The woman in the red shirt and straw hat is our recently-elected mayor, Lori Lightfoot. Next to her in the burgundy pants suit is our newly-elected alderman, Samantha Nugent.

I’m guessing that Mayor Lightfoot read the election returns. In the primaries the voters that turned out most solidly for her were on the Northwest Side. However, I did find it notable that she walked the parade. We frequently have politicians show up for the Sauganash parade but this is the first time I can recall that politicians have walked it. And they most frequently show up before an election rather than after one. That’s change of a sort.

This year the Fourth of July found me sad. The bonds of belief, commitment, and national pride that have connected the people of the United States, never the strongest, are fraying. It is being demanded that symbols of the country, like the flag of the American Revolution, George Washington, and Thomas Jefferson be removed or destroyed because they were not conceived without sin. It is not the demands that bother me but that they are being taken seriously enough to terminate products, destroy murals, and abolish holidays in their honor. I don’t think anything can survive that scrutiny. I wonder if we’re becoming little more than a currency exchange.

When I was a kid in St. Louis from about June 15 to about September 15 the temperature went up to about 100°F every day with humidity about 100 as well. Night was little relief. The temperature rarely went below 80°F at night.

We did not have air conditioning. My dad considered it an unnecessary luxury. When the sun came up we sealed the house as well as we could, closing the curtains and windows, opening the door for as short a time as possible. When the sun went down we pulled the cooler outdoor air in with fans. It was hot and close but tolerable.

The only people with tans were field hands, laborers, and the rich.

In the winter, say, from December through January, at night the temperature generally dipped below 32°F but during the day it almost invariably rose above freezing. Drivers in St. Louis know how to drive on ice! Temperature very rarely went below 10°F and much warmer temperatures during the day were a commonplace. I knew people who made a tradition of playing golf in their shirtsleeves on Christmas Day.

Where I live now in Chicago in the summer we always have a few days where the temperature rises above 100°F and we always have a few days in the winter when the temperature dips below 0°F. Summer nights are generally very pleasant.

St. Louis is at roughly the same latitude as Algiers. Chicago is at roughly the same latitude as Rome. Algiers and Rome are more temperate than St. Louis or Chicago because of the moderating effect of the sea. For comparison Paris and Frankfurt are at about the same latitude as Vancouver.

Until the invention of the steel plough much of the Midwest could not be cultivated. The turf was too tough, the soil too rocky or, as in Missouri, too clay-ey. You had to be tough and tenacious to wrest a living from the soil.

The people of the United States mirror their land. There is a toughness, a roughness to the people of the Midwest, just as there is to their land. By comparison the Eastern seaboard and the West Coast are much more temperate, much more like Europe.

The most miserable weather I have ever experienced in the United States was in Texas. It’s beastly hot in the summer and either dry as dust or dank and humid, depending on where you are. There is nothing quite as frightening as watching a thunderstorm move towards you across the hundreds of miles of Texas prairie.

I have nothing but respect for the people of Texas. Not only do they tolerate it, they love their native state. That takes a special kind of person.

For practical purposes Florida was unlivable until the invention of the electrical air conditioner in the late 1920s. Swamp coolers (evaporative air conditioning) helped a little but not a lot.

The people of Europe are presently going through a heatwave, temperatures rising above 100°F. They are not accustomed to it. They have my sympathy.

Where I lived in Germany winter temperatures rarely dropped below 20°F or rose above 80°F in the summer. If my experience is any gauge, the climate in Europe is incredibly mild, the land rich and gentle. Europeans cannot understand how rough and hard a place the United States is.

At Bloomberg Noah Smith has a post that is so important it should be required reading. Here’s the meat of it:

How much of this increase in market value was due to rent extraction, or to the expectation of future rent extraction? Economists Daniel Greenwald, Martin Lettau and Sydney Ludvigson believe they have an answer: Most of it. In a recent paper, they built a model of the economy in which the value created by businesses could be arbitrarily reallocated between shareholders and workers. They found that redistribution from workers to shareholders accounted for 54% of increased stock wealth. Falling interest rates, rising investor appetites for risk and economic growth comprised the remaining 46%.

[…]

But this leaves the question of how shareholders have managed to extract increasing rent from the economy. In a healthy economy, competition should get rid of rents, because new companies will enter the market and vie for a slice of that pie, offering lower prices and higher wages until the rents mostly disappear. In some industries, like semiconductors, this still happens.

But in most industries, economists Germán Gutiérrez and Thomas Philippon believe, this process has broken down. In a new paper, they attempted to measure how much new business entry responded to the market opportunity available in an industry. Gutiérrez and Philippon used a measure called Tobin’s Q, which represents the ratio of a company’s market value to the book value of the company’s assets. When Q is high, it should mean that new competitors have an opportunity to come in and take some of the profits in that industry, thus reducing existing companies’ price premium and bringing Q down. Indeed, the authors found that this was common up until the late 1990s. But after 2000 — right around the same time that profits started to rise to unprecedented levels — the relationship broke down. High Q levels no longer seem to attract new market entrants.

The most credible explanation for this is that the companies are able to lobby their way into regulations more favorable to themselves. That’s the “crony capitalism” I complain about so much. Their main form of business investment is lobbying and the ROI is great.

What can be done about it? I think that we should be breaking up big companies just because they’re big and prohibiting large foreign companies from doing business in the U. S. outright (a frequently-encountered excuse for corporate size is to be able to compete with large foreign competitors).

At RealClearWorld Ken Pollack remarks on President Trump’s Iran policy:

In May 2018, Secretary of State Mike Pompeo laid out a dozen far-reaching steps that Iran will have to take to get the administration to reverse course. While nothing short of regime change in Tehran would realistically fulfill those conditions, these were probably part of a maximalist bargaining position — an opening bid. Trump never expected to get all or even most of them. So, what does the president want?

It seems increasingly clear that all Trump really wants is a new nuclear deal with Tehran. He wants it to be better than the one his predecessor Barack Obama sealed — the 2015 Joint Comprehensive Plan of Action. Trump believes that by placing enormous economic pressure on Iran, he will force the Iranians back to the negotiating table. Once there, Trump believes he will have the leverage he needs to extract bigger concessions from Tehran than what Obama got, possibly in return for fewer benefits than Obama gave.

I think that’s a remarkably optimistic view. I’m not sure how well it comports with reality.

I’ve always found the JCPOA puzzling because I thought it was only useful if it was unnecessary, an inherently contradictory situation. I wish more people were observing that Iran’s rapid restocking of its inventory of refined uranium demonstrated just how limited the JCPOA’s utility was.

Recently, someone made a case to me that I found intriguing and persuasive. The purpose of the JCPOA from our point of view was not to change Iran’s behavior, reduce its stockpile or refined uranium, or to halt its nuclear development program. It was a confidence-building move. IMO that would have been a worthwhile goal.

Unfortunately, that seems to have failed as well.

That is the somewhat counter-intuitive and certainly counter-narrative conclusion of the book, Identity Crisis: The 2016 Presidential Campaign and the Battle for the Meaning of America, reviewed by George Hawley at Library of Law and Liberty. Here are some of the factors the authors say were not significant in shaping the outcome:

• Russian interference
• Clinton’s campaign tactics
• Clinton’s emails (that lets James Comey off the hook)
• Economics

and here’s what they say was significant:

After demonstrating why other factors had, at most, a modest influence on the election result, Sides, Tesler, and Vavreck conclude that racial attitudes were a key predictor of vote choice. I hasten to add, they carefully note that the relationship of such attitudes to electoral behavior was complicated—the election was not merely a story of white racial animus, or Trump normalizing racist and nativist language.

They also note that, contrary to conventional wisdom among liberal commentators, there is little evidence that Trump increased racism in the electorate. In fact, polling shows that feelings of prejudice among whites have decreased since 2016. This change has only occurred among white Democrats, however—white Republican attitudes have not changed very much in either direction.

Although Trump’s rhetoric did not stir up white anxiety or feelings of racial identity and resentment, he did make these politically salient. That is, there was a weaker correlation between racial attitudes and vote choice in previous elections, including 2008 and 2012, when Barack Obama was the Democratic nominee. Because race was a central element of Election 2016, apparently, racial attitudes were a more important predictor of vote choice in both the GOP primary and in the general election.

The emphasis is mine. Read the whole thing and draw your own conclusions.

Speaking of unintentional humor, in his Washington Post column Charles Lane is worried that we’re borrowing from foreign countries to finance political squabbling:

What accounts for the current ramp-up in the debt, at a time of relative peace and steady if unspectacular economic expansion? On June 25, the Congressional Budget Office reported that, under the most politically realistic forecast, the debt will hit 105 percent of gross domestic product by 2029, a level not seen since World War II.

Obviously, federal spending exceeds revenue, as it has every fiscal year since 2002. On a deeper level, though, the explanation is that the United States is at war — with itself. It is manifestly not a shooting war such as the one between 1861 and 1865, which drove the federal debt to a then-record of just over 30 percent of GDP.

Yet polarized and mutually distrustful Republicans and Democrats are engaged in a Cold Civil War, and have been for years, even before the Trump presidency. The impasse has rendered impossible the compromises and trade-offs — tax increases and spending cuts, or some combination thereof — needed to adjust the existing array of government programs to modern priorities, and to available national resources. Two such deals in centrism’s last heyday, the 1990s, helped create a balanced budget from fiscal 1998 through fiscal 2001, the first and only ones of the past half-century.

In more recent years, however, politicians keep the government more or less going via short-term deals (usually increasing outlays on existing programs and priorities) and borrowing, borrowing, borrowing — to the tune of 42 out of every 1,000 dollars the U.S. economy will produce in the current fiscal year, according to the CBO.

Okay, I’ll bite. According to the Treasury during fiscal 2018, foreign purchasers reduced their holdings of Treasuries from $6,433.3 billion to $6,180.5. How does a net reduction finance anything?

Spending exceeds revenues because we’re spending too much. Full stop. We are borrowing consumption from the future to pay for today’s consumption. We’re also deluding ourselves into thinking that it’s investment. Whatever else they are, end of life care for the elderly, pensions, endless foreign wars, and college degrees which do not lead to gainful employment are not investments in any measurable sense. They are consumption. We need to reduce consumption and increase proper investment. Renaming consumption investment does not make it investment.