My TLP Regrets

Posted on October 7, 2017 by Arnold Kling

I have two regrets about The Three Languages of Politics, both of which concern the cover.

1. I am really jealous of the graphic for Andrew Sullivan’s piece in New York Magazine. It depicts three separate clusters of sheep, with each cluster a different color. You get the sense that each individual sheep wants desperately to be in the middle of its cluster, so they crowd closer together. As they crowd closer together within a cluster, the more distinct the clusters become from one another.

2. I think that the subtitle we came up with, “talking across the political divides,” is misleading. It makes it sound as though I offer a pat solution for political polarization. Instead, I delve into the nature of the problem. In terms of the sheep-clustering metaphor, I talk about what makes us cluster and the importance of resisting the urge to push into the middle of your cluster.

Less interest in cooking

Posted on October 6, 2017 by Arnold Kling

Eddie Yoon writes,

Only 10% of consumers now love to cook, while 45% hate it and 45% are lukewarm about it. That means that the percentage of Americans who really love to cook has dropped by about one-third in a fairly short period of time.

Pointer from Tyler Cowen.

As I have said before, the trend in hobbies is narrower, deeper, older. Fewer people are engaged in each hobby. Those engaged are much more dedicated. And hobbies that have been around a long time attract an older constituency.

How to fix baseball

Posted on October 6, 2017 by Arnold Kling

Tyler Cowen points to an article in the WSJ about the causes of the slowdown in baseball games.

What I would most like to see in baseball is a reversal of the trend toward Scheblerization. As a hitter, Scott Schebler does not put the ball in play very often. In a typical season, he would come to bat just over 500 times, strike out 132 times, and hit 28 home runs. In fact, there are more extreme examples. In 2017, Joey Gallo came to the plate 532 times. He drew 75 walks, struck out 196 times, and hit 41 home runs. Almost 60 percent of the time, he gave the fielders nothing to do.

Regardless of how long a game takes, Scheblerization makes the game seem much slower. There is action when players sprint to get to a base while fielders scramble to retrieve and throw the ball. There is the excitement of an uncertain outcome. Not so much with players walking back to the dugout after a strikeout or jogging around the bases after hitting a home run. In my view, the frequency of strikeouts and home runs also reduces the distinction and drama associated with being a strikeout pitcher or home run hitter.

The rule change that I would propose would be to increase the size of the baseball. Perhaps it would be sufficient to make the diameter of the baseball larger by half an inch.

The secondary effect of a change of this sort is hard to predict. But I think that the primary effects would be:

1. Make the baseball harder to grip.
2. Increase the wind resistance of the baseball.

This in turn would make it harder for pitchers to throw over 90 miles an hour, so that there would be fewer strikeouts. It also would make it harder to hit fly balls over the fence, so that there would be fewer home runs. With those primary effects, I would expect to see more balls in play. I hope that the secondary effect would be to decrease the comparative advantage of the Scheblers and Gallos and instead increase the comparative advantage of batters who make regular, solid contact with the baseball.

If making contact becomes “in” again, then perhaps there will be fewer pitches per at-bat, and games will not stretch out as long. Regardless, games will not seem so long if there are more balls put in play.

My $.02

Dueling views of China

Posted on October 5, 2017 by Arnold Kling

Tyler Cowen said,

in terms of human talent, GDP, China right now is in most ways a peer country to the United States. We’re not ready for that, mentally or emotionally.

In contrast, Peter Zeihan sees China in a precarious position:

1. China is the about to age at the most rapid rate of any country. Over the next twenty years, the average age of the U.S. population will barely budget, but the average age in China will rise 5 years.

2. China is much more dependent on trade than the U.S. It needs to import great quantities of oil, from the Middle East. According to Zeihan, “somewhere between 40 percent and 50 percent of the Chinese economy is directly involved in international commerce.”

3. China’s navy would have a very difficult time operating out of China’s waters.

4. China’s geography is conductive to internal strife and warfare, but not to economic integration.

Mulling the rule of law and legislation

Posted on October 5, 2017 by Arnold Kling

What is the opposite of the rule of law?

Maybe your first thought is “arbitrary dictates by the ruler.” But my first thought is violence and banditry.

If you take my point of view, then in order to have rule of law, you need to have legitimacy. That is, people need to accept the authority of the legal system, whatever they perceive it as being.

What this implies is that the rule of law is something of a consensual hallucination. That is, whatever people tacitly agree is lawful, is lawful.

This gets back to the question of the role of legislation vs. common law. If people readily accept that law enacted by legislation is lawful, then even though legislation may resemble the arbitrary dictates of the ruler, it serves the rule of law. The problem with arbitrary dictates is that they undermine the legitimacy of law in the eyes of people (at least in the eyes of modern people). Similarly with legislative excess.

Possibly related: Dani Rodrik writes,

Markets need regulatory and legitimising institutions to thrive – consumer-safety rules, bank regulations, central banks, social insurance and so on. When it comes to providing the arrangements that markets rely on, the nation-state remains the only effective actor, the only game in town. Our elites’ and technocrats’ obsession with globalism weakens citizenship where it is most needed – at home – and makes it more difficult to achieve economic prosperity, financial stability, social inclusion and other desirable objectives. As we’ve all seen, elite globalism also opens political paths for Right-wing populists to hijack patriotism for destructive ends.

UPDATE: contra Rodrik, here is Don Boudreaux.

Macroeconomics as narrative

Posted on October 4, 2017 by Arnold Kling

Challenging the narrative that the Fed’s quantitative easing was a success, Brian S. Wesbury and Robert Stein write,

The Fed boosted bank reserves, but the banks never lent out and multiplied it like they had in previous decades. In fact, the M2 money supply (bank deposits) grew at roughly 6% since 2008, which is the same rate it grew in the second half of the 1990s.

So, why did stock prices rise and unemployment fall? Our answer: Once changes to mark-to-market accounting brought the Panic of 2008 to an end, which was five months after QE started, entrepreneurial activity accelerated. New technology (fracking, the cloud, Smartphones, Apps, the Genome, and 3-D printing) boosted efficiency and productivity in the private sector. In fact, if we look back we are astounded by the new technologies that have come of age in just the past decade. These new technologies boosted corporate profits and stock prices and, yes, the economy grew too.

The one thing that did change from the 1990s was the size of the government. Tax rates, regulation and redistribution all went up significantly. This weighed on the economy and real GDP growth never got back to 3.5% to 4%.

Pointer from John Mauldin. My thoughts:

1. Recall that Ed Leamer’s macro book is called “Macroeconomic patterns and stories.”

2. We should certainly be skeptical of the narrative that the Fed achieved something. After all, they simply re-arranged the maturity structure of government debt, which is something that the Treasury can do (or un-do). As I keep saying, the Fed is just another bank, playing the maturity mis-match game. So in theory their actions should have little effect. In practice, they did not hit their inflation target. So the only thing the standard narrative has going for it is that it pleases people who like to see the Fed as important and successful.

3. We should be skeptical of Wesbury’s and Stein’s narrative, also.

Peter Zeihan’s world view

Posted on October 3, 2017 by Arnold Kling

I am reading his book The Absent Superpower. You can get a lot of his ideas by watching this video. You can also see his intellectual style, which is certainly more confident than mine. He deals in strong pronouncements, and he does not worry much about establishing causality or conceding the plausibility of alternative hypotheses.

I view recent history and the near-term outlook as dominated by the four forces: increased resources devoted to education and health care (the New Commanding Heights); bifurcated marriage patterns; globalization; and computerization.

Note that a lot of economists’ bandwidth these days is focused on the computerization issue. For example, Tyler Cowen attended a conference of heavy hitters on the economic implications of artificial intelligence.

Zeihan igores those four forces in order to focus on energy markets and demographics. In the case of energy, he sees the shale revolution as a geopolitcal game-changer. Where I assume that “oil is oil,” so that the location of supply matters less than the overall match between supply and demand, he attaches great significance to the ability of the U.S. to match its own oil supply and demand. He sees this leading the United States to completely lose interest in global security and the international trading system.

Zeihan asserts that without our adult supervision, the world playground will erupt into wars: along Russia’s borders, in the Persian Gulf, and in Northeast Asia as China and Japan struggle over the sea lanes for oil in a world of energy supply disruptions.

In the case of demographics, he sees financial markets in terms of a simple life-cycle model of behavior: younger workers spend, older workers (40 – 65) save and take financial risks, and retired workers become risk averse. The Baby Boom generation has been in the older-worker phase, helping to drive up prices of risky assets throughout the world. But they are transitioning to retirement, which means they want to shift away from risky assets to low-risk assets.

Also important is the overall aging of the developed world, with the U.S. a bit of an exception. See Timothy Taylor on Asia. This is going to expose many countries to financial strife. The ratio of workers to dependents will be too low to support pensions systems.

Watch the video and/or read the book. I am curious what you think.

A sociologist’s work, condensed

Posted on October 3, 2017 by Arnold Kling

My latest essay includes this:

Regardless of whether informal authority is to be praised or condemned, it is with us. Informal authority is worth the attention of anyone interested in human conflict and cooperation. In short, sociology matters.

The essay discusses a book by David Swartz on the sociology of Pierre Bourdieu. You can think of the book as a condensation of Bourdieu’s life work. You can think of my essay as a condensation of the book. You can think of this blog post as a condensation of my essay.

Jeffrey Friedman’s best essay (so far)

Posted on October 2, 2017 by Arnold Kling

One random excerpt:

Citizen-technocracy is not only impossibly demanding; it is highly paradoxical.

As a citizen-technocrat, I can participate in politics, whether by voting or through more persistent activism, only if I am first convinced that I know the truth about the social and economic problems facing millions of anonymous fellow citizens (or if I think I can learn the truth through political participation). But if citizen-technocrats took the full measure of the knowledge they need, either (a) they’d recognize that as a practical matter the truth is unobtainable, leading them to select themselves out of the electorate; or (b) their political participation would consist of handing power over to experts (or people who strike them as being experts). In the latter case, citizen-technocracy would turn itself into epistocracy. In the former case, citizen-technocracy would perpetuate itself, but only by weeding out the most sophisticated citizen-technocrats, leaving the most simplistic and thoughtless to make decisions. People who (overall) don’t know what they’re doing would end up running the citizen technocracy. And among them, disagreement would congeal into mutual hostility.

I strongly recommend the entire essay.

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