Author Archives: Arnold Kling

My Number One Pick

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I have scheduled a post to go up in a week or so about “Fantasy Intellectual Teams.” I am trying to figure out how to make it sound serious rather than frivolous. In fact, it is an attempt to fix the main problem of our times, which is the demise of our key institutions and what Martin Gurri describes as the “post-truth” age and the loss of authority.

I claim that the reason that we don’t have socially trusted authorities any more is that we suffer from intellectual status inversion. The people at the top of the status hierarchy in the bureaucracy, journalism, and academia are not great thinkers. And the great thinkers are not at the top of the status hierarchy. I believe that a necessary and sufficient condition for pulling society out of the ditch is to come up with a cure for intellectual status inversion. We need to reverse the status levels of Coleman Hughes and Ibram X. Kendi, for example.

Once the really great thinkers are on top, then the people below them will be copying better examples. This will make the social process of searching for truth more functional.

You should ask, How are we to determine who are the really great thinkers? That is where the Fantasy Intellectual Teams contest fits in. If I were advising you to draft a fantasy intellectual team, I would argue that the number one pick should be Scott Alexander. He is the most careful thinker out there, by a noticeable margin.

He is like a lawyer who is the best at arguing either side of a case. This is illustrated in one recent post, Ontology of Psychiatric Conditions. The question is whether there is a clear distinction between being normal and having a condition, such as depression or schizophrenia. Read the post to see how well he formulates the question and how carefully he sifts through the evidence pertaining to the answer.

But at some point we should judge a thinker side by side against another thinker. And that is where another recent post, Contra Weyl on Technocracy, comes in. Let me leave aside the substantive issue and instead treat this as a contest between Alexander and Weyl.

In the grand scheme of things, perhaps Weyl is under-rated, in the sense that most of the public intellectuals who are more well known are worse than he is. (As an aside, you can think of the Fantasy Intellectual Teams project as an attempt to play out Tyler’s “over-rated or under-rated” game until the right people come out on top.) But Weyl is not on my list of very careful thinkers. In fact, I am very much put off by him.

So what you have in the post on technocracy is the world’s leading intellectual grandmaster dispensing with a patzer. To take just one illustrative passage from Alexander,

Did you notice none of Weyl’s examples of technocracy fit this definition at all? Robert Moses had zero formal training in urban planning or anything related to city-building. The Soviet leadership wasn’t “meritocratically chosen”. And Oscar Niemeyer didn’t construct a High Modernist planned village and a control village, test which one performed better on various metrics, and scale the winner up into Brasilia.

Tech power and government power

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Allen Farrington writes about

a rather odd belief about where, precisely, the power lies in this relationship—that Twitter, Facebook, and the like have amassed enormous power, are throwing it about wantonly, spiralling out of control, and must be constrained by the wise and impartial. A simpler thesis would be that the reason so much of “Big Tech” spontaneously coordinated as it did was a political calculus aimed at avoiding onerous regulation by currying favour with the incoming administration. Journalist Michael Tracey summarised the essential misdiagnosis of power like this: “The new corporate authoritarian liberal-left monoculture is going to be absolutely ruthless. And in 12 days it is merging with the state. This [is] only the beginning. The real ‘threat’ at this point is crazed oligarchs + politicians using the ‘crisis’ to consolidate power.”

Conspiracy or kludge?

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The unfortunately named Anthony Denier says,

in reality, what’s going on is that there is a two-day settlement between if you buy the stock today, those brokerage firms that you bought that stock on have to fund that trade with the clearing central house called DTC for two whole days. And because of the volatility of stocks, DTC has made the cost of the collateral of the two-day holding period extremely expensive.

…So the brokerages or the clearing firms have to go into their own pockets to do it. And they simply can’t afford the cost of that trade clearance. That is the reason why these stocks are coming off. It has nothing to do with the decision or some sort of closed room cigar– smoke-filled cigar room of Wall Street firms getting together to the dismay of the retail trader. This has to do with settlement mechanics of the market.

Pointer from Tyler Cowen.

This reminds me that back in the housing market collapse a lot of the foreclosure paperwork was flawed. This was not some conspiracy on the part of lenders to improperly foreclose on homes. It had to do with the mismatch between the mortgage securities market, where the lender of record could in some sense change in seconds, and the antiquated housing title system, where records are stored at a county courthouse, often in paper format, with a cumbersome process for updating that could take. . .almost forever.

I would bet that the two-day settlement delay in stocks is as anachronistic as the real estate title system. When you have a system that wants to be instantaneous but incorporates a process that hasn’t been updated in decades (or longer), this is what you get.

Once again, I am violating one of my norms, which is not to pile into the latest news. But here goes:

1. This seems like partly a Charles Kindleberger moment. In Manias, Panics, and Crashes, he adapts the Minsky model to major historical financial manias. Kindleberger’s thesis is that when there is a major shock that shifts a lot of wealth to a particular population, manias can ensue. The tulip mania is the classic example.

Over the past twenty years, we have seen a massive shift of wealth toward the tech sector and finance. Then the virus hit, accelerating these trends. Then the government printed enormous amounts of paper wealth as “stimulus.” All of this was enough to fuel asset bubbles.

2. This also seems like partly a Martin Gurri moment. Individual investors were participating in the financial equivalent of the Capitol riot. Some of them do not care whether or not they make a profit–they are in it for the schadenfreude.

In fact, I think this is an even more severe blow to American prestige than the Capitol riot. The U.S. can station enough troops in DC to convince the world that Congress cannot be invaded so easily. But there is no straightforward way that I can see to reassure investors of the integrity of the market.

Right now, large investors are scared of what small investors can do, and conversely. How do you ease the fear on one side without increasing the fear on the other side? How much does the market rally of recent years depend on small investors, and what sort of reversal could we see if those investors bail out because they believe that the system is rigged against them?

V-Day?

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Today we have had our appointments for the first dose. But because the vaccine location is in a different county from where we live, that county decided to cancel us.

Actually, it sounds like we would have had a DMV-like experience. I’m not feeling sad.

Note that the average daily death rate in the U.S. is about 5 times it was this summer. If the vaccine is 90 percent effective, that means that my risk after vaccination is 1/10 of what it was without vaccination. Combining the two, that means that after the second dose and the vaccine has taken hold, I will have half the risk that I had this summer. That does not make me excited about getting out and circulating, even with the vaccine.

I will feel better if after a couple of months there are signs that the vaccine is reducing the incidence of the virus in the whole population. In a sense, getting the vaccine early is like getting onto a tour bus early. The bus isn’t going anywhere until more people are on board.

By the way, I think that Alex Tabarrok’s idea of giving first doses to more people and second doses to fewer people is unlikely to work in a free society. From society’s perspective, it may work more quickly to eradicate the virus. But from an individual perspective, I would rather wait to get two doses than get one dose and have to live with uncertainty about what happens next.

Speaking of the virus, the asymptomatic spreader fight never ends. Daniel P. Oran and Eric J. Topol write,

Today, the best evidence suggests that about half of Covid-19 cases are caused by infected people who do not have symptoms when they pass on the virus. These symptom-free spreaders are roughly divided between those who later develop symptoms, known as pre-symptomatic individuals, and those who never develop symptoms.

On the politics of the virus, Christopher J. Snowdon writes,

I suppose my position is boringly centrist. If you want a more invigorating take, you might be drawn to the Zero COVID strategy supported by “Independent” SAGE or the plan laid out in the the Great Barrington Declaration to shield the vulnerable and achieve herd immunity the old-fashioned way. Both of these options carry significant downsides and have now been made redundant by the vaccines, but whilst these ideas might have been flawed or unrealistic, they were not crazy. The former had worked in New Zealand and the latter had been the preferred policy of the chief medical officer until the hasty U-turn of March 2020. These were ideas that reasonable people could debate without being considered cranks.

But now, in the final months of this nightmare, the conversation among many of the noisiest lockdown sceptics has become decidedly cranky.

He speaks as a libertarian, policing his own side. Policing your own side is very honorable, in my view. It is the best way to fight polarization.

But libertarians can be more correct than others give them credit for. See Jacob Grier, who points out the many way government failures in the pandemic. Pointer from Tyler Cowen.

This reminds me that my main problem with “state-capacity libertarianism” is that the phrase itself assumes away, or at least downplays, the main reason I have for leaning libertarian. That is, there are structural reasons for state performance to be worse than you would expect and for market performance to be better than most people would expect.

Can reconciliation solve polarization?

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Peter T. Coleman writes,

given that many Americans feel left behind, the new leaders should begin by launching a listening tour during which they partner with local, trusted community groups to elicit grievances and proposed remedies. Research has shown that when members of disenfranchised groups feel heard by those in power, it can lead to constructive shifts in attitudes.

He also suggests strengthening local “bridge-building groups” that “fight against the pathologies of hate and can help citizens build bipartisan alliances that take on the structural incentives that divide us.”

He has a forthcoming book on the topic. Thanks to a reader for the pointer.

The suggestions are in line with what Yuval Levin wrote as the election was pending.

Americans have failed one another by failing to ask what the roles we each have in particular institutions — familial, communal, religious, educational, professional, civic and political — demand of us in key moments. Often what they demand is restraint and responsibility, doing your job rather than building your brand.

Perspective of another old net-head

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Doc Searls writes,

This simple fact of our distributed souls and talents has had scant respect from the centralized systems of the digital world, which would rather lead than follow us, and rather guess about us than understand us. That’s partly because too many of them have become dependent on surveillance-based personalized advertising (which is awful in ways I’ve detailed in 136 posts, essays and articles compiled here). But it’s mostly because they’re centralized and can’t think or work outside their very old and square boxes.

Read the whole post. It is hard to excerpt.

Centralization looks attractive when you have Fear Of Others’ Liberty along with confidence that those who have power will exercise it the way you want. When people you despise are de-platformed, you’re all for it.

There is a parallel with the argument between libertarians and FOOLs over gun control. In fact, the phrase “when crypto is outlawed, only outlaws will have crypto” has been around since Bill Clinton’s first term. On guns, the FOOLS argue “Look at all the homicides and suicides.” The libertarians retort that if you take away people’s ability to self-protect, they will be at the mercy of either criminals or government or both.

Blame the Boomers?

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In a review of Helen Andrews’ Boomers, Barton Swaim writes,

“The theme that connects all these seeming digressions,” Ms. Andrews writes, “is . . . the essence of boomerness, which sometimes manifests itself as hypocrisy and other times just as irony: they tried to liberate us, and instead of freedom they left behind chaos.” I’m not convinced that this theme, if that’s what it is, sufficiently connects all the discursive wanderings in these essays; you sometimes get the sense that Ms. Andrews wants to bring up a few points of irritation before she takes leave of the subject. But I don’t complain—she’s worth following.

Each essay in the book has a central Boomer character, such as Steve Jobs or Camille Paglia or Aaron Sorkin. My thoughts:

1. The only character I ever knew personally was Jeff Sachs. When we were in our twenties, he seemed like a great guy. Since then, we have not interacted, and I have not followed him closely. I respect him for not kowtowing to the “in crowd” of Fischer/Blanchard/Bernanke/Yellin and company, but I disagree with a number of his positions on issues. I get the sense that he has not handled fame well, and Andrews dwells on anecdotes that reinforce that impression. But in this Tyler Cowen conversation, I see mostly the Jeff Sachs I knew and little or nothing of the jerk.

2. I think that Andrews is more on target than Swaim gives her credit for. The common element in the Boomers she portrays, and in our generation as a whole, is self-aggrandizement.

The pre-Boomers might be symbolized by Dwight Eisenhower. He was self-effacing. When he was given a major challenge, he succeeded at it. And as President, he undertook the Interstate Highway System, which achieved its goals, rather than the War on Poverty or the invasion of Iraq, or Obamacare, which did not.

The Boomers portrayed by Andrews are gifted at self-promotion. They make grandiose promises to make the world better, and they undertake projects that have results that are mixed, at best. Andrews assiduously reminds us of the adverse consequences of some of Sachs’ economic advice, of Paglia’s celebration of pornography, of Aaron Sorkin’s glamorization of White House aides, etc.

Swaim notes that Jobs accomplished a lot. But Jobs and the other pioneers and the computer and the Internet set goals that were more grandiose than coming up with products. They wanted to achieve a social revolution that gave more power to ordinary individuals. The failure of that project is evident in the popularity of the phrase “tech oligarchs.”

Martin Gurri writes,

We need elites who can stand straight in the digital storm and exploit the institutional stage to build and grow rather than strut and self-promote.

He is hopeful that the younger generation will be better at this than the Boomers. Andrews is pessimistic about that. So am I.

Economic impacts of the virus

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Jose Maria Barrero, Nicholas Bloom, Steven J. Davis, and Brent H. Meyer write,

as of December 2020, firm-level forecasts of sales revenue growth over the next year imply a continuation of recent changes, not a reversal. Firms hit most negatively during the pandemic expect (on average) to continue shrinking in 2021, and firms hit positively expect to continue growing. Third, our survey data say that COVID-19 shifted relative employment growth trends in favor of industries with a high capacity of employees to work from home, as measured by Dingel and Neiman (2020), and against industries with a low capacity.

They emphasize the reallocation effects of the virus. Of course, in the PSST framework, every macroeconomic event is a reallocation shock.

Should we tolerate zero tolerance?

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Robby Soave writes,

Nevertheless, the Niskanen Center fired Wilkinson and made it clear that they did so explicitly because of the tweet. “The Niskanen Center appreciates and encourages interesting and provocative online discourse, wrote Niskanen President Jerry Taylor in a statement. “However we draw the line at statements that are, or can in any way be interpreted as, condoning or promoting violence.”

Hence, Will Wilkinson evidently was fired for making a sarcastic tweet.

I see Wilkinson as a victim of what I call Zero Tolerance Culture. Zero Tolerance sets up a binary: stay on this side of the line and you’re ok; cross the line and we bring down the hammer!

Zero Tolerance creates zero tolerance for ambiguity, for mitigating circumstances, and for making the punishment proportionate to the crime. The popularity of the phrase “Zero Tolerance” actually serves to legitimate the arbitrary use of power.

I would rate members of the commentariat on a scale that is not so binary. Instead, imagine a scale from 1 to 100. If your score is 1, then in my opinion the world would be a better place if no one listened to you. If your score is 100, then I wish everyone listened to you. In my subjective rating system, the punishment for saying something wrong would be a reduction in score.

It might be fun some day to publish my ratings of public intellectuals. Off the top of my head, and leaving out people I know personally, those scoring in the high 90s would include Coleman Hughes and Jonathan Haidt.

Ten years or so ago, I would have scored Wilkinson somewhere in the 80s. More recently, I probably would have put him somewhere in the teens. But the offending tweet has no effect on his score, as far as I am concerned.

Note 1: In posting this instead of the post I was planning to put up today, I am violating a personal norm, which is that ordinarily I do not rush to comment on the latest kerfluffle. I am once again putting off a post with more cancel-bait than anything else I have written, much worse than anything said by Wilkinson or many others who have been canceled. You’ll know it when you see it, unless I come to my senses and trash it altogether.

Note 2: Jason Brennan comments,

Niskanen’s senior leadership is and has been unworthy of its quality staff.

If quality staff agrees with this assessment, then they should be able to do better elsewhere. I’m not saying that it is morally wrong to stay at Niskanen, but staying there may not be the wisest career move.

The Model T economy and the wealth-work economy

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At Yuval Levin’s suggestion, I read Boomers, by Helen Andrews. One of the accusations she makes is that Boomers are responsible for an economy based on servitude. She writes,

The fastest-growing jobs in America are in “wealth work,” that is, the servant class for the metropolitan elite. The only thing worse than spending your adult life as a yoga instructor or dog groomer is living in a city with no one to be yoga instructors and dog groomers for.

She refers to a piece by Marc Muro and Jacob Whitin in July of 2019.

many American cities are brimming with an explosion of low-end employment that has brought some three million workers into mostly low-paid, often-precarious service arrangements helping the well-off walk the dog, clean the house, cook dinner, manage money, and stay fit.

They have the statistics to back up these claims. They credit the term “wealth work” to economics journalist Cristopher Rugaber and MIT economist David Autor. Note that in 2020 the virus undermined the viability of many personal services (although not all–consider home delivery).

In 2011, I wrote,

In an economy where some folks are very rich and many folks are unemployed, why are there not more personal servants? Why don’t Sergey Brin and Bill Gates have hundreds of people on personal retainer?

It turns out that I was on the right track. When the economy finally returned to full employment, it was with a large number of personal service workers.

The workers who produced the Model T could afford to buy what they produced. In a wealth-work economy, the people who can afford the personal services and the people who provide them belong to different classes.

One of my intellectual influences was The Diamond Age, by Neal Stephenson. He depicts a future world in which there are “Vickies,” who work hard (at white-collar jobs) and consume custom products, and “Thetes,” who rarely work and consume cheap, generic goods and services. I have interpreted recent economic evolution through that lens. I could have titled this post “What I believe now: Vickies and Thetes.”

But wealth-work is an emergent phenomenon. The Boomers did not design our current economy. I will have more to say about the Andrews book in a subsequent post.