You see it in every new administration. A group of newcomers arrive, most knowing nothing about government or even much about the past, they see the reality of government, and they’re terribly disillusioned. That’s how I read this piece by Diane Sroka Rickert, reprinted at the Foundation for Economic Education:

I walked into the Thompson Center on my first day, not knowing what to expect. In many ways, my new workplace was like any other large organization: big building, thousands of people and plenty of broken computers.

Except this building is dilapidated, many of the employees are political hires and the computers will never be repaired, ever.

And it’s all paid for by you, Illinois taxpayers.

Read the whole thing but let’s stop right there. Let me explain what she saw. On several of the floors of the Thompson Center, nearly every available inch of floor is covered by old computers. Where did they come from, who paid for them, what are they doing there, and what will happen to them?

The answers are that

• American taxpayers paid for them. They were bought using money from specific federal grants.
• The projects for which they were used are over or the computers are no longer functioning and by law they can’t be used for anything else.
• Most of them are incapable of running today’s operating systems.
• No one knows what will happen to them. They can’t just be scrapped because they still appear on federal inventories and the state needs to retain them in case of federal audit. There’s nowhere to which to return them. They can’t be used for any purpose other than the projects for which they were originally purchased. They’ll sit there until the Thompson Center is sold at which point they’ll be moved somewhere else.

So, yes, there’s an abuse here but it’s not the one the author thinks there is. The problem is that if you write the rules with as much flexibility as she seems to think there should be it would be a license to steal.

The key problem is that good government is hard. Not enough flexibility is wasteful. Too much flexibility leads to abuse. Preserving good government requires constant vigilance and, frankly, more management acumen than we’re ever likely to see in government.

Do you know how I know that? I saw it and I asked. Then I asked someone else who corroborated what I had been told. Apparently, the author didn’t ask the right people.

There are a number of largely empty government buildings in Springfield. Why are they largely empty? Because they once had many more state employees in them than they do now. Is the reduction in the state’s payroll a victory or a defeat? It depends on how you look at it and what problem you’re trying to solve.

I liked Samuel Gregg’s piece at Public Discourse for several reasons but most of all for this succinct description of the American economy in the 21st century:

In short, it’s an error to argue that the capitalism of much of the contemporary West—a blend of cronyism, neo-mercantilism, and markets—is effectively capitalism. There are many manifestations of capitalism, and their specific forms are more influenced by different ideas and cultural dispositions than we sometimes realize.

The emphasis is mine. What I find so astonishing about the modern day is the almost complete absence of public virtue. You see that everywhere, not just in the government but in businesses, religious institutions, entertainment, do I need to go on?

Capitalism in the absence of virtue has little to recommend it over socialism in the absence of virtue. It does have a little: socialism in the absence of virtue has killed more people than all wars put together.

The essential question is if the absence of virtue is a permanent feature of the way we live now, what sort of society would best preserve us? I’ve answered that question dozens of times.

David Leonhardt’s recent New York Times column bears a claim which at first blush is alarming:

By 2019, a prime measure of the economy’s health — gross domestic product per working-age adult — will likely have recovered less in the 12 years since the crisis began than it did during the 12 years since the start of the Great Depression. When I saw a chart making this point, in a new paper from Olivier Blanchard and Larry Summers, I was stunned. The chart is reproduced above.

but doesn’t really stand up to scrutiny. First, GDP growth is a lousy proxy for a country’s economic well-being. It depends on the nature of the additional production and where it goes. If Berkshire-Hathaway’s stock were to rise in market cap by a trillion dollars would it really mean that the U. S. economy were a trillion dollars sounder?

But look at the point of inflection in the Depression-era GDP growth. It occurs nine years after the start of the Great Depression in 1929, in 1938. What was happening in 1938? Europe was at war and war industries were gearing up. Now look at the peak of the curve. It occurs in 1944, the acme of the U. S.’s wartime command economy.

Consequently, what Mr. Leonhardt is bringing to our attention is war and the wartime command economy. I’ll have less, please. That’s a very poor choice for nostalgia.

Unintentionally, I think that Mr. Leonhardt is actually complaining about the Obama Administration’s lousy record on the economy. IMO after enacting the America Recovery and Reinvestment Act, the administration turned its attention away from the economy too soon. The ARRA should have spent more money in its first year of operation rather than dribbling it out over four years. And the president should never have signed the law imposing the largest, most regressive tax in American history—the reimposition of FICA. At the very least that should have been delayed another two years.

No country releases more carbon dioxide into the atmosphere per year than China. After rising sharply for decades, last year its carbon emissions were flat. U. S. carbon emissions have been approximately flat for the last 25 years. In fairness China’s per capita carbon emissions are lower than those in the United States.

Here’s Fareed Zakaria in the Washington Post:

Coal-fired power plants are one of the nation’s leading sources of carbon-dioxide emissions, and most scientists agree those emissions lead to global warming. They also cause terrible air pollution, with all its attendant health problems and costs.

That’s one of the reasons China, which suffers more than a million deaths a year because of poor air quality, is making huge investments in clean energy. The country has become one of the world’s leading producers of wind turbines and solar panels, with government subsidies enabling its companies to become cost-efficient and global in their aspirations. In 2015, China was home to the world’s top wind-turbine maker and the top two solar-panel manufacturers. According to a recent report from the United Nations, China invested $78.3 billion in renewable energy last year — almost twice as much as the United States.

Now Beijing is making a push into electric cars, hoping to dominate what it believes will be the transport industry of the future. Already China has taken a large lead in electric cars. In 2016, more than twice as many were sold in China as in the United States, an astonishing catch-up for a country that had almost no such technologies 10 years ago. China’s leaders have let it be known that by 2025 they want 20 percent of all new cars sold in China to be powered by alternative fuels. All of this has already translated into jobs, “big league” as President Trump might say: 3.6 million people are already working in the renewable-energy sector in China, compared with 777,000 in the United States.

What do you conclude from this? I don’t conclude that from it that the United States should emulate China. I conclude that in an authoritarian country it’s a lot easier to promote government investment to maintain or increase market share, subsidizing domestic industries to shut potential competitors out.

Will China’s flat carbon emissions continue? Or are they just a sign of a struggling economy? Stay tuned.

I don’t want to perseverate on this but there are a few things that need saying. I’ll put them in bullet point form.

• Nearly all of the actresses who’ve come forward to complain about Harvey Weinstein are in their forties, some in their fifties. They have very little to lose by stepping forward.
• A notable exception to that is Cara Delevigne who is 25, right in his preferred demographic for victims. Unless you believe that he took a 20 year hiatus, there are dozens, scores, or even hundreds of actresses or aspiring actresses ages 25-40 who haven’t come forward.
• Everyone in the business knows about the prevalence of sexual harassment and abuse, not just of young actresses but also of young actors, many at first hand.
• Unindicted co-conspirators include all of the biggest names in the business—Steven Spielberg, George Lucas, Ron Howard, Frank Marshall, the list goes on and on. None of them have anything whatever to lose. Every single one of them knows and elects to remain silent.
• The Weinstein Co. hasn’t had a hit in two years. In Hollywood years, that’s a lifetime. Do you believe that the story would have come out if they had?

Maybe the dam is about to break but I’m skeptical. I think that after a momentary furor it will be back to business as usual in Hollywood.

Mamas, don’t let your babies grow up to be actors. Perhaps some day a hero will come along and divert a river through the stables but I doubt it. Hollywood is about illusions, about lying. We like our illusions.

I don’t have a great deal to say about the fires raging, out of control, in Northern California. It’s a horrendous situation. They say that at least 17 people have lost their lives and at least 2,000 structures have been destroyed. Given the median home price of around $500,000 in the affected counties, expect the costs to run into the billions if not the tens of billions.

If this editorial at the Sacramento Bee is any gauge, expect the cost of living in California to get a lot higher soon.

The degree of partisanship in the country is increasing. That’s what Pew Research has found:

Over the past six years, the share of Democrats and Democratic-leaning independents saying the government should do more to help the needy, even if it means going deeper into debt, has risen 17 percentage points (from 54% to 71%), while the views of Republicans and Republican leaners have barely changed (25% then, 24% today). However, Republicans’ opinions on this issue had shifted substantially between 2007 and 2011, with the share favoring more aid to the needy falling 20 points (from 45% to 25%).

The result: While there has been a consistent party gap since 1994 on government aid to the poor, the divisions have never been this large. In 2011, about twice as many Democrats as Republicans said the government should do more for the needy (54% vs. 25%). Today, nearly three times as many Democrats as Republicans say this (71% vs. 24%).

Basically, Republicans are becoming more Republican and Democrats more Democratic. The parties continue to change from the “catch all” parties they’ve always been to programmatic parties.

In terms of affiliation the two political parties are just about the same with 29% Republicans and 30% Democrats. 40% of Americans consider themselves neither Republicans nor Democrats.

I don’t believe this divergence can continue indefinitely. Either one party, the other, or both must stop their move away from the other party, there needs to be a new assertion of federalism, or fracture or violence are inevitable.

I read Eduardo Porter’s article in the New York Times, “Why Big Cities Thrive, and Smaller Ones Are Being Left Behind” with considerable skepticism:

To prove his point, Mr. Muro compared the 100 largest metropolitan areas in the country, those with populations above 550,000, with the 182 smallest, which have populations ranging from 80,000 to about 215,000. On average, the big ones got out of the recession faster than the small ones.

To get a sense of the future, he selected big and small metropolitan areas only in the 10 states most subjected to economic disruption — as defined by the penetration of automation and job displacement as a result of foreign trade — to tease out the effects of these transformative forces.

The difference in performance widened: Private employment grew almost twice as fast in large metropolitan areas as it did in small ones from the trough of the recession, in 2009, to 2015. Income grew 50 percent faster. And the labor participation rate — the share of the working-age population in the labor force — shrank only half as much.

“Economic transitions work against smaller America,” Mr. Muro told me. “This is a period demanding excruciating transitions.”

How, then, does he explain Pittsburg, Cleveland, Detroit, and Chicago? They are or at least were “big”. All are experiencing the same things he attributes to “small” cities.

IMO he’s looking at the wrong factors. Over the period of the last 15 years New York City has received repeated massive subsidies. The subsidies have taken the form of direct grants, regulations, and propping up its local industries (mostly banking and finance) and have been valued in the trillions of dollars. How would New York have fared if Citibank had been allowed to fail?

The industrial Midwest on the other hand has received an ongoing onslaught in the form of the managed trade agreements negotiated over the period of the last 40 years that have picked winners and losers. New York and Los Angeles have been winners. Chicago has been a loser.

That tells us nothing about the benefits of large or small, coastal or central, or much of anything else other than the value of political clout.

The “Thucydides trap” refers to the notion that war between an established power and an up-and-coming power is inevitable. It derives from Thucydides’s ancient classic, The Peloponnesian War. I’ve been critical of the idea as it pertains to the inevitability of war between the United States and China but there’s a battle between an established power and an up-and-coming power that’s real and going on right now. It’s the battle in the retail space between Wal-Mart and Amazon. Investor’s Business Daily reports:

Wal-Mart, the largest retailer in the world, is showing that an elephant can dance. Besieged by Amazon’s online dominance and ability to deliver goods at super-low prices overnight, has responded to the challenge.

Unlike other brick-and-mortar retailers like JCPenney (JCP), Sears (SHLD) and other former stalwarts that themselves were never able to respond to Wal-Mart’s challenge 30 years ago, the Bentonville, Ark.-based discounting giant has moved aggressively into e-tailing.

Walmart said its e-commerce business is set to expand by 40% next year as it goes toe-to-toe with Amazon. It will boost its online grocery pickup sites by 100% or more in the coming year, while hiring an army of 2,000 “specialists” to keep on top if its burgeoning website.

Last year, Wal-Mart put up $3 billion for Jet.com, an online retailer whose “smart-cart” checkout technology has helped Wal-Mart boost its e-sales by 60%.

This is only part of the future that Wal-Mart is building. Soon, it hopes to keep families’ pantries stocked, just as Wal-Mart stocks its own shelves, using enhanced pickup and delivery and letting customers use their cellphones to do everything from returning goods to ordering.

The only question I have about this is which is the “established power” and which the challenger? It would seem obvious. Despite the hype over Amazon Wal-Mart does five times the amount of retail sales that Amazon does and its earnings on its retail sales are better. Amazon isn’t even among the top five retailers. However, until very recently nearly all of Wal-Mart’s sales were in its brick-and-mortar stores. The retail behemoth is going toe-to-toe with Amazon on its own turf. It’s certainly acting like a challenger.

Don’t count Wal-Mart out.