Author Archives: Arnold Kling

Have a nice semester

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My latest essay says,

I worry that civil discourse around CRT is not going to happen. Instead, parents who most believe in civil discourse will simply pull their children out of public schools, rather than wade into the controversy. Teachers who are not “woke” will be treated as pariahs by other teachers and administrators. Public schools will end up serving the children of parents who are either very progressive or apathetic. There will emerge another school system, a separate but equal school system if you will, for children of parents who are conservatives or old-fashioned liberals.

[UPDATE: Read Bonnie Snyder’s essay. Also, Richard Hanania writes that legislative bans will fail to achieve their attended purpose.

the only real option for conservatives is to attack public education and encourage a larger migration to private schools and home schooling.

Two CRT links

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For future reference.

First, William Galston writes,

Critical race theory is an explicitly left-wing movement inspired by the thinking of an Italian neo-Marxist, Antonio Gramsci. Against classic Marxism, for which material conditions are primary, Gramsci (1891-1937) focused on “hegemony”—the system of beliefs that “reinforces existing social arrangements and convinces the dominated classes that the existing order is inevitable,” as Ms. Crenshaw puts it.

Noteworthy because Galston is center-left. He is burning some bridges here.

Helen Pluckrose writes,

Rather than quibbling over whether what critics are criticising is really the theories that emerged in legal studies from the 1970s, let’s address the reality of what critical theories of race look like right now and how they are impacting real people of all races.

In much of the essay, Pluckrose really gets into the theoretical weeds, even though she points out that a different CRT has been popularized than what was created in academia. This reminds me of Keynesian economics in grad school, where there were all sorts of esoteric discussions of what Keynes really meant and what Keynesian economics ought to be. Meanwhile, what took hold in the press and in public policy is what I call “folk” Keynesianism, which is nothing more than “spending creates jobs, and jobs create spending.” The academic arguments matter only to the academics.

Similarly, I expect that academic discussions of critical race theory no longer affect “folk” critical race theory, or FCRT, if you will. FCRT is what K-12 teachers and journalists carry with them. I think it includes a belief in the moral inferiority of white males. It includes a belief that “privilege” is a very important concept. I think it includes some Puritan sensibilities, particularly an unforgiving stance regarding heretics. But these are tentative thoughts about FCRT. I do not feel confident that I have it pinned down yet.

TBT

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I wrote,

For now, I am refraining from speculating on ETFs that profit from increases in interest rates. In other words, I am not putting my money where my mouth is (except that I have invested a lot in inflation-indexed bonds, or TIPs).

If you want to put your money where my mouth is, then you want to buy shares in TBT. But doing so will lose if goods prices revert to their declining trend. As I put it,

The big question going forward is this:

  • Will inflation will go back to “normal,” meaning that the prices of services like higher education and health care go up, but goods prices trend downward?
  • Or are we in a new environment, with rising prices for goods, in which case sooner or later interest rates have to rise, also?

Declare wokeness a religion

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James M. Patterson writes,

If wokeness becomes a legally recognized religion in the United States, efforts by adherents to secure state patronage and enlist public entities in their struggle would violate constitutionally protected natural rights.

Having wokeness recognized legally as a religion would solve many problems.

If you watch John McWhorter on Firing Line, you will hear views that have influenced my own.

How I will judge whether the economy is “back to normal”

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In a few days, the Commerce Department will release personal savings rate data for June. Meanwhile, in May the personal savings rate was 12.4 percent, which is the lowest it had been since February of 2020. But, as this chart shows, that was still far above historical experience. And it does not include the increased wealth that comes from higher prices for stocks and real estate.

The theory that inflation will subside as soon as the economy gets “back to normal” strikes me as incoherent. If “back to normal” means that all of this excess saving gets worked off, then consumer spending is going to surge. If “back to normal” means that firms invest in new capacity to get rid of supply constraints, then business investment is going to surge. For example,

Mr. Gelsinger, after little more than a month in the top job, committed Intel to making $20 billion in chip-plant investments in Arizona. Less than two months later, he added a $3.5 billion expansion plan in New Mexico. The Intel CEO has said more financial commitments are on the drawing board, both in the U.S. and overseas.

For me, the indicator that we are “back to normal” is the real interest rate, meaning the interest rate minus the rate of inflation. If that is slightly positive, we are at normal. For the last several months, it has been steeply negative, and it seem poised to remain that way for at least the rest of this year.

If you bought a 3-month T-bill in March, you paid an inflation tax of close to 10 percent at an annual rate. That’s what you get for trusting the market.

Or go back to the 1970s.

The key standout is that you really didn’t want to own Treasury bonds. The near 40% loss of purchasing power over 10 years is somewhat notional—it is derived from the compound annual returns on 10 Year Treasurys compiled by New York University’s Stern School of Business, divided by the consumer-price index—but tells a story nonetheless.

The worst thing you could have done in the 1970s would have been to trust the bond market. Today, you certainly won’t find me owning any long-term bonds that aren’t indexed for inflation.

Wesley Yang’s take

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Wesley Yang started with this.

Among Biden’s first acts in office was to issue an executive order that has been taken as a warrant by those keen to extend this mandate further—into the provision of medical services by race and other areas to equalize outcomes wherever statistical disparities in outcome persist. Those disparities were henceforth to be understood as the product of a foundational, pervasive, trans-historical, and unyielding racism that can only be dislodged through the overt distribution of opportunity and reward by race in pursuit of “equity”, which has displaced mere equality as the aim of racial activism.

the federal government and other private entities have already crossed a Rubicon and signaled a willingness to defy legal precedent and public opinion in accordance with the ruling consensus of the new regime that they have thereby inaugurated.

I call this regime the Successor Regime. 2021 is its Year Zero.

Have a nice regime.

Cryptopia?

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In a comment, Michael Strong writes,

As the crypto-libertarian generation increasingly is of age to raise children, nearly 100% of their children will be raised outside of establishment institutions. Many of these people are expats or digital nomads. The movement is increasingly international, with the brightest, tech savvy, and increasingly wealthy people from around the world simply leaving legacy institutions behind. Competitive governance is here.

The grievance study majors reigning over the rotting corpse of government institutions in the 21st century will find those institutions bankrupt within a decade or so. This world will not be glamorous or fashionable. Young people won’t be attracted to a life in this world. Already no one really wants to teach in government schools.

Speaking of the process of demoralizing teachers, Gregory Hansen writes,

I am no longer in the classroom. I won’t see the next generation of ideologues sweep through campuses. However, as the political Left endlessly moves the goalposts after each Pyrrhic victory, I hope the moment will come when a critical mass of faculty and students refuse to play the game. It is difficult to convey the toll taken—semester after semester, year after year, decade after decade—by a teaching environment in which a single criticism or correction or incautious remark can produce an explosion and formal or informal disciplinary proceedings. For almost 50 years, I’ve had to be on the alert, recognizing that conflict with any student other than a heterosexual white male could cost me. Most students wanted to learn. I developed radar for those who didn’t—for those searching after grievance. This sounds exaggerated. It is not. Many students with preferential status now work the system in multiple ways, sometimes with little awareness of the special treatment they receive.

I skimmed his essay. Reading the whole thing would be too depressing.

Strong paints a much more optimistic scenario. Call it cryptopia. It goes like this. Suppose the price of Bitcoin goes up by a factor of five. Then some Bitcoin owners will be billionaires, who can start their own utopian libertarian cities. Once bright, ambitious people can leave legacy governments behind, they will never go back.

This is the ultimate use of exit instead of voice. So far, exit strategies this ambitious have not worked, but we will see. I think it will be hard to really make an alternative financial system safe and effective. And I can imagine that if enough talent exits legacy governments, those governments will change from being stationary bandits to roving bandits, and then the cryptopias will have to worry about how to defend their people’s wealth.

Incumbentocracy

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As far as I know, the term was coined by Handle.

Incumbentocracy is a big topic, but in general, I’d say if you look at the set of names in the top echelon of a lot of different areas, the longevity and stability of those sets has tended to increase a lot.

Think of Harvard. Think of the NYT. Prestige hierarchies appear to be stable and self-perpetuating. But I wonder if we are in for some instability in the next twenty years.

Markets are less stable. These days, it seems difficult for a firm to remain on top for more than a few decades.

Two sources of causality

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Howard Darmstadter writes,

We have two different ways of explaining events. One way relies on material factors and physical laws: “The water boiled (or the meat cooked) because the flame heated it.” The second way relies on beliefs, wants, and other psychological traits: “He crossed the road because he wanted to get to the other side.”

We generally favor the psychological mode to explain human actions, and the material mode to explain inanimate events. It’s usually problematic to propose a psychological explanation for a material event, as when pre-scientific peoples explain a violent storm as caused by an angry god. It’s an error we can still be prone to: I stub my toe on a table leg, and for a moment I’m angry at the table. A more insidious misuse of psychological explanation is to see events that result from the uncoordinated actions of many individuals on the model of the consciously planned actions of a single person.

To put this in my own words: we can think of causes as material or intentional. A material cause is a historical impetus that pushes from the past. An intentional cause is a goal that pulls from the future. We can say that the car stopped because of a series of physical events. Or we can say that the car stopped because the driver made a plan to stop it.

The field of economics struggles with which of these causal frameworks to use. Most economists try to use the material framework. But human intentions constantly intrude. Social norms, institutional practices, and widely-held beliefs are non-material factors that affect economic outcomes.

A surplus of affluent females?

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1. Vincent Harinam writes,

There is an average yearly surplus of 2.2 million female undergrad enrolees between 2020 and 2029. Between 2030 and 2039, this number increases Morgan Stanley forecasts that 45 percent of working women between the ages of 25 and 44 will be single and childless by 2030, the largest share in history. to 2.3 million. Cumulatively, there will be a whopping 45.1 million women without an equally educated male partner between 2020 and 2039.

. . . Morgan Stanley forecasts that 45 percent of working women between the ages of 25 and 44 will be single and childless by 2030, the largest share in history.

This has many consequences. But one of them is that it bolsters the Democratic Party. The Democrats may not reap the demographic dividend long predicted based on rising numbers of minorities, but they can more reliably count on college-educated single women.

2. Or is it a surplus of bicycles relative to fish? (possibly obscure reference) From Aella, in an interview with Bari Weiss

When it comes to gender roles, the thing that men provide is typically protection, and the thing that women provide is typically reproduction. We no longer need protection, but we still need reproduction, so it’s like, ‘What do men do? Why are they valuable? Why are they even here?’ It’s kind of the ambient question in the background. . . .I feel like this is the thing that we’re going to have to figure out how to grapple with as a culture, because with any sort of advancement in a culture, we’re going to run into this problem where the role of one gender becomes unnecessary faster than the role of the other. This creates an imbalance in value. I think the imbalance in value ultimately is the thing that’s contributing to this sort of thing where women are able to rake in huge amounts of cash online while men are like sitting alone in their basements watching.