Donald Trump does not have the temperament of a person I would wish to see in the presidency. I wish he responded with more decorum and forebearance. But there he is.

Let’s engage in a little thought experiment. Let’s assume that the media engaged in a persistent, concerted campaign of attack against the president and his or her administration, with little regard for facts, fairness, or the good of the country. Let’s further assume that the president responded or, more accurately, didn’t respond by counter-attacking as Trump routinely does, also without regard for facts, fairness, or the good of the country.

What would happen?

Is the moral do not tease the animals?

There’s an interesting cross-blog conversation about supply, demand, inflation, and Fed policy going on. First, John Cochrane wrote a highly technical post with a rather simple message—inflation is hard:

Why is it so hard? The standard story goes, as there is less “slack” in product or labor markets, there is pressure for prices and wages to go up. So it stands to perfect reason that with unemployment low and after years of tepid but steady growth, with quantitative measures of “slack” low, that inflation should rise, as Ms. Yellen’s first quote opines.

That paragraph contains a classic economic fallacy, that of composition; the confusion of relative prices and the level of prices and wages overall. If labor markets get “tight,” companies finding it hard to find workers, then yes, one expects wages to rise. But one expects wages to rise relative to prices. You only tempt workers to move to your company by offering them wages that allow them to buy more. Similarly, if there is strong demand for a company’s products, its prices will rise. But those prices rise relative to other prices and to wages. Offering a company higher prices when its wages, costs, and competitor’s prices are all rising does nothing to get it to produce more.

which highlighted a number of misconceptions about inflation, including misconceptions shared by the board of governors of the Federal Reserve. Then Tyler Cowen linked to it. Then Scott Sumner responded to it:

This is one of those cases of two things that look superficially similar but are actually radically different, like eels and snakes. When money became very tight in 1921, 1930, 1938 and 2009, the equilibrium price level fell sharply. Nominal wages also needed to adjust downwards. Unfortunately, nominal wages are sticky, so wage growth slowed much too gradually to prevent high unemployment. Thus even though nominal wage growth slowed in all four cases, real wages actually increased sharply. Cochrane’s right that the wage changes we see in this sort of labor market have nothing to do with microeconomic models where a high level of demand means rising prices and a low level of demand means falling prices. Those micro models refer to real or relative prices, not nominal prices.

Hidden in the posts are a number of interesting points:

• The Fed has maintained a tight money policy for some time. Some (like me) have suspect that the problem the Fed has actually been addressing rather than, say, persistently low inflation or slow growth, has been big bank insolvency which, unfortunately, they’ve abetted.
• The Taylor Rule actually would be doing a better job.

all of which, naturally to my mind, raise the point are Fed screw ups inevitable? I believe they are. The Great Depression, the Capital Strike of 1938, and the Great Recession are all, arguably, the consequences of mistakes by the Fed rather than the myriad of explanations that have been presented for them. The reality is that there are just too many moving parts for any small group of individuals however well intentioned, educated, and informed to execute all of the tasks the Federal Reserve is presently undertaking.

What to do? I think that the Fed’s mandate should be limited to bank governance and the popular press and the public need to discard the image of the Fed governors as all-mighty and all-knowing wizards.

That’s Ziva on the left and Nola on the right. I guess it’s true what they say—everybody looks cooler in shades.

As I’ve mentioned in the past, as I practice it the art of blogging is a responsive one. I read an article, editorial, or op-ed. I respond to it.

Today I’ve read about a dozen pieces in which there have been about an ounce of insight to several pounds of verbiage. You can’t make bricks without straw.

How ’bout them Cubs? Should there be a “slaughter rule” in the majors?

There’s an interesting article at the European Council on Foreign Relations by diverse authors on China’s grand strategy which I commend to your attention. If you haven’t been paying attention, China’s objective is to become the world’s pre-eminent power, something many Chinese believe is their rightful place, first cultivating economic strength and then military strength. They will accomplish this by exploiting their greatest strength: being a command economy controlled from the top. That is the context in which I see Chinese President Xi’s consolidation of power in his own hands.

Read the whole thing.

Unlike many I tend to see China as a challenge but not a threat. I continue to believe that what China perceives as a strength is actually a weakness and that what the Chinese authorities have been referring to as their “rise” and now refer to as their “rejuvenation” has been much more the consequence of Western fecklessness than of Chinese acumen.

Is China now the world’s pre-eminent power? By purchasing power parity standards they already have the world’s largest economy although by nominal standards they’re still lagging behind the U. S. by about a third. I wonder how the accounts would stand if debt were taken into account. IMO China’s own internal contradictions will be their downfall and it can happen catastrophically and abruptly.

I don’t honestly care whether the U. S. is the world’s pre-eminent power or not as long as our real economy grows, median incomes rise, and standards of living improve. We should stick to our knitting and worry about our own internal contradictions rather than about China.

There is an article at Science that asks an interesting if stomach-churning question: were the Chinese authorities right in implementing the “One Child Policy” 40 years ago? What’s the dividing line separating demographics, the study of populations, from politics and morality?

Read the whole thing.

There are many, many courses of inquiry that have become taboo (and more that probably should be) because they are so prone to be misused. Is demographics one of them? What are the limits of legitimate demographic inquiry?

I have a basic question about Mark Mackie’s post, re-posted at RealClearDefense, “Solving the Siege of Seoul”. Why is it any of our business?

That the residents of Seoul are at the mercy of North Korea’s Kim regime is not headline news. It’s been true for well over half a century. They’ve accepted the risk. They may not really understand the risk; they may underestimate it. But it’s their risk not ours.

If American interest requires that we act against North Korea militarily, we will need to ignore sunk costs and, sadly, the lives of the people of Seoul (not to mention Pyongyang) are among them.

All of that is why I don’t believe we should engage in preventive war. If Seattle or Guam or Japan or a U. S. aircraft carrier (or Seoul!) are attacked by the North Koreans, it’s a different story.

You might want to read Peter St. Onge’s consideration of the Universal Basic Income at the Foundation for Economic Education. He’s against it.

Fascinating to me is that he misses the gravest practical problem with the UBI. Assume for a moment that a UBI is implemented and it takes the form of sending every man, woman, and child in the United States a check for $1,000 every month, funded simply by issuing credit. What would happen?

What’s more important is what wouldn’t happen. It wouldn’t result in the production of more goods and services, especially in areas like real estate where there is natural scarcity. They aren’t making new land.

What would happen is that rents, home prices, the prices of many other goods and services would rise to absorb the additional cash and we’d be just about back where we started except that we’d be issuing a lot more debt ($330 billion a month). There would be political pressure to increase the monthly stipend, politicians would yield to the pressure, ad infinitum.

Then there are other problems: the psychological, physical, and social problems of mass idleness, the rush of people across our borders to take advantage of the program, etc. etc.

I don’t believe in master stroke solutions to problems for the simple reason that are always complications, run-on effects, and it is a commonplace for run-on effects to overwhelm the actual result desired. However, as master stroke solutions go, the UBI is a terrible one. A national guaranteed job program would be better but that would have its own set of problems.

The editors of the Washington Post are concerned about what they call Chinese President Xi’s “worrying vision” for his country. It takes them a while to get around to the meat of their concerns but here they are:

Most of all, his vision of China as a superpower was infused by a nationalist agenda. In an address that stretched for three hours and 25 minutes, Mr. Xi intoned the phrase “strong power” or “great power” 26 times, according to a New York Times count. Mr. Xi boasted that one of his regime’s most internationally controversial actions, the fortification of islets in the South China Sea, was a highlight of his first five years in office, even though an international tribunal found Beijing to be acting contrary to international law.

Mr. Xi’s biggest applause line was a vow to “never allow anyone . . . at any time or in any form, to separate any part of Chinese territory from China.” That would include Hong Kong and Taiwan, along with those disputed rocks. But he said nothing about North Korea or its manic pursuit of a nuclear arsenal, the crisis that most demands China’s responsible cooperation.

What they haven’t established is why we should be worried. Yes, China is a different country from the United States. It has its own problems, concerns, and objectives, different from ours. Why should any of that surprise or concern us? Because China would dare to have a foreign policy different from our own?

IMO Chinese nationalism shouldn’t concern the editors of the WP. What should concern them is the U. S.’s lack of nationalism, sometimes pursuing goals that aren’t actually in our interests, sometimes pursuing goals that are only in the interests of a very narrow segment of individuals while on occasion even harming the majority of Americans or our long-term interests.

There are plenty of Chinese policies about which we should be worried. Is Tibet actually “part of Chinese territory”? Or is China’s rule of Tibet an example of raw expansionism? Where does that place Vietnam, Laos, Cambodia, North and South Korea, parts of Russia, and parts of India, all of which were ruled by the Chinese at one time or another? Is there a sort of Chinese “Brezhnev Doctrine”?

China is routinely and systematically engaged in cyberattacks against U. S. government agencies and private companies alike, scouring them for usable intelligence and intellectual property. They are also routinely and systematically violating U. S. intellectual property rights. Now those are all legitimate worries.