WEEKLY BRIEFLY NOTED: FOR 2024-09-13 Fr
My weekly read-around: Xi Jinping trying to keep growing Chinese capitalism inside the “bird cage”; Montana’s Beartooth range; “Rings of Power” elvenizes the orcs—to the dismay of trolls, & not in-universe ones; SubStack NOTES; very briefly noted; the Jacksonian thread of American nationalism; Daniel Webster bemused by the inauguration of Andrew Jackson; & weekly briefly noted for 2024-09-06 Fr…
ONE AUDIO: The Best Recent Thing I Have Hears on China:
& on just what Xi Jinping thinks he is doing:
China’s Bird-Cage Economy: ‘In this episode of Pekingology, Freeman Chair in China Studies Jude Blanchette is joined by David Hoffman, Senior Advisor with the China Center for Economics & Business at The Conference Board The Conference Board, and non-resident Senior Associate with the Freeman Chair in China Studies at CSIS. They discuss China’s economy, political economy, and evolving business environment…
<https://overcast.fm/+AAf_JQRxLoI>
ONE IMAGE: The Beartooth Range of Montana:
Hazy because of Idaho wildfires, but impressive nonetheless.
ONE VIDEO: Humanizing (Elvenizing?) the Orcs:
From Amazon’s Lord of the Rings: The Rings of Power. Apparently the trolls—not the in-universe trolls you understand, but the right-wing internet shitposters—are unhappy with the idea that orc mothers and fathers love their children.
SubStack NOTES:
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Very Briefly Noted:
Economics: The Ten-Year TIPS real interest rate is 1.7%/year right now and the nominal Ten-Year 3.7%/year—that is materially lower than the Fed’s 2.5%/year CPI inflation target. Why is this the case? Does the Fed think that the bond market has overshot it on expectations once again, or is there some reason the Fed wants an economy at sub-full employment. Powell said that he does not want to see any further labor market deterioration. But is there a theory of what is going on in the economy that does not make that deterioration very likely, given today’s policies?
Justin Wolfers: ‘I think this is a really smart point. Real rates are far too high right now (a point I’ve constantly warned about as inflation has declined). We’ve gotta get to “normal,” and we can’t take too long to get there: Greg Ip: “Jobs report wasn’t definitive on Fed cutting 25 or 50. But another factor argues for 50. Mkt inflation expectations falling, only partly due to lower oil prices. Thus, real funds rate risen to a very high 3.2-3.6%, vs neutral at 0.8%. (Source:ICE) Fed needs to normalize… <https://www.threads.net/@justinwolfers/post/C_l2CfmSe7j>The answer, I think, is that the bond market’s expectations give recession—and thus a rapid return to the zero lower bound on interest rates—a significantly higher probability of coming to pass than the stock market’s expectations. And it is hard for even someone very clever to figure out how to make money at scale from this divergence, and hence push expectations in the two markets into harmony:
John Authers: Today’s Points: ‘With August inflation data in the books, don’t expect the fed funds rate to fall more than 25 basis points next week. But—if markets have this right—you should still expect 250 basis points of cuts by the end of 2025. That implies deep problems for the economy—but corporate profits look fine. No wonder people bought stocks…. The problem is that services inflation remains uncomfortably high…. Going further into the future, confidence in a drastic and sustained easing campaign looks unshakeable… <https://public.hey.com/p/QtnQV4NrVjWWqkZoahnKDXE8>Somebody should run a big conference on this new trilemma, and run it soon:
Dani Rodrik: A New Trilemma Haunts the World Economy: ‘It may be impossible simultaneously to combat climate change, boost the middle class in advanced economies, and reduce global poverty…. Climate change is an existential threat. A large and stable middle class is the foundation of liberal democracies. And reducing global poverty is a moral imperative. It would be alarming if we had to abandon any of these three goals. Yet our current policy framework imposes, implicitly but forcefully, a trilemma that appears difficult to overcome. A successful post-neoliberal transition requires us to formulate new policies that put these trade-offs behind us…. Labor-absorbing sectors such as care, retail, education, and other personal services are non-traded for the most part. Promoting them does not create trade tensions in the same way as in manufacturing industries. This means that the conflict between the middle-class imperative in rich economies and poor countries’ growth imperative is less severe than meets the eye… <https://www.project-syndicate.org/commentary/new-trilemma-of-climate-change-global-poverty-rich-countries-middle-classes-by-dani-rodrik-2024-09>
The Labour government is voluntarily making itself a hostage to a major productivity rebound more-or-less immediately. This is a risky thing to do. But do they have a real choice?
Dan Davies: the mean reversion imps: ‘The British economy is, as can be confirmed by reading journalism on the subject, basically a realm of fantasy…. The “magic money tree”… hidden in Threadneedle Street. The Reform Fairy determines long term public spending growth, while the Confidence Fairy sets the level of long term interest rates and the exchange rate. However, possibly hidden away in the Celtic Fringes, I think there’s another kind of mythical wee beastie which is about to become important…. This [2%/year] productivity [growth] trend used to be a very well-established empirical fact, but then it ceased to be so…. The expectation of the consensus of mainstream economic thought, as summarised by the Office of Budget Responsibility, that the mean reversion imps would come along to do their stuff…. [People] are anticipating that the mean reversion pixies are still out there, just waiting for Liz Truss and Kwasi Kwarteng to stop scaring them away. It’s not in any way a ridiculous thing to believe and it might not even be wrong. It just worries me that it’s so damned congenial for an optimist… <https://backofmind.substack.com/p/the-mean-reversion-imps>This is all OK as long as not too many of the losers are not too highly leveraged with the debtholders themselves also being too highly leveraged:
William Cohan: Creative destruction rips through US commercial property: ‘Sector shakeout is leading to pain for both equity and debtholders…. The county of Los Angeles recently agreed to buy Gas Company Tower… for $215mn, well down on its appraised value of $632mn in 2020…. In San Francisco, talks are reported to be under way over a $26mn offer for… historic 400 Montgomery Street… down two-thirds from… $77mn five years ago…. In Oregon’s Portland… Montgomery Park, the state’s most prominent office building, just sold for $33mn, down 87 per cent from… $255mn… in 2019. And in Manhattan… 135 West 50th Street… sold in an online auction for $8.5mn, a small fraction of the $332mn it sold for 18 years earlier…. Schumpeter’s logic is likely to prove true. Flexner said many of these buildings would be razed, taken down to the raw land, at great cost, and then would rise again as residential properties or new commercial properties designed to meet the demands of the evolving office culture. Until then, the bloodbath will continue and the pain will be considerable for both equity and debtholders…<https://www.ft.com/content/531f2cda-f378-441c-8158-207a1305d7de>
Economic Development: But if not land reform as kick-off, what was? I still think land reform was a key in eliminating the possibility of the creation of a Latin American-style alliance between landlords and bureaucrats, but…:
Oliver Kim & Jen-Kuan Wang: Land Reform in Taiwan, 1950-1961: Effects on Agriculture and Structural Change: ‘Taiwan’s landmark 1950s land reform… Phase II… redistributed formerly Japanese public lands… [and]reduced tenancy, boosted rice yields, and increased the share of labor in agriculture. By contrast, phase III—which reduced tenancy by breaking up larger estate—did not increase agricultural productivity and pushed labor (in particular, female labor) out of agriculture into manufacturing…. Phase II can still explain at most one-sixth of observed 1950s rice yield growth. These results challenge the longstanding view that land reform was a major factor behind Taiwan’s economic takeoff… <https://oliverwkim.com/papers/KimWang_Taiwan.pdf>Clever and honest governments in middle-income countries can do industrial policy based on factor accumulation. But what is needed is technology transfer, for factor accumulation has profound limits:
Martin Wolf: Overcoming the ‘middle income’ trap: ‘The principal failure of these countries lies not in accumulating too little capital, but in using it poorly…. The focus must shift from investment… to infusion of new ideas available abroad… development of a more sophisticated economy. That depends on the acquisition and development of knowhow… skilled workers (engineers, scientists, managers) and openness to ideas… direct investment and trade…. For innovation, exchanges of human capital are particularly important, including via education and work abroad. The resulting diasporas are a huge potential asset. Innovation also depends on access to global markets…. In developing countries… the rise of protectionism and consequent fragmentation of the world economy are likely to make their prospects worse… <https://www.ft.com/content/5c486ddb-61f2-4280-a61b-5e14107fb024>Neofascism: Does Dick Cheney even matter?. Do any of them even matter? I am reminded of a passage from one of Robert Harris’s “Rome” novels, Dictator: “I cannot remember exactly what [Cicero] said. All the usual words were there—liberty, ancestors, hearths and altars, laws and temples—but for once I listened without hearing. I was looking at the faces of the legionaries. They were sunburnt, lean, impassive. Some were chewing mastic. I saw the scene through their eyes. They had been recruited by Caesar to fight against King Juba and the army of Cato. They had slaughtered thousands and had been stuck in Africa ever since. They had travelled hundreds of miles crammed together in boats. They had been force-marched for a day. Now they were lined up in the heat in Rome and an old man was talking at them about liberty, ancestors, hearths and altars—and it meant nothing. Cicero finished speaking. There was silence. Cornutus ordered them to give three cheers. The silence continued. Cicero stepped off the platform and got back into his litter and we returned down the hill, past the saucer-eyed starving children…”:
Charlie Sykes: How Dick Cheney Could Matter: ‘The former VP opens the door…. “In our nation’s 248-year history, there has never been an individual who is a greater threat to our republic than Donald Trump. He tried to steal the last election using lies and violence to keep himself in power after the voters had rejected him. He can never be trusted with power again. As citizens, we each have a duty to put country above partisanship to defend our Constitution. That is why I will be casting my vote for Vice President Kamala Harris…” Former Vice President Dick Cheney, September 6, 2024…. Trump himself dismissed Cheney as “an irrelevant RINO.” A RINO is, of course, a Republican In Name Only, and Trump’s use of the term to describe the former two-term GOP VP reminds us for the gazillionth time that irony is well and truly dead. But is Cheney really “irrelevant”?… Can the Cheneys make a difference?… And what might that look like?… A bipartisan group of patriots who would join Cheney in warning voters against restoring Trump to power…. Trump’s former Chief of Staff (John Kelly); former secretaries of defense (Mark Esper, James Mattis); and former national security advisor (H.R. McMaster) that Trump poses a real and present danger to the nation?
What if all of the living secretaries of defense — from both parties — joined them? Would that make a difference? Honestly, I don’t know. But I’d like to find out… <https://charliesykes.substack.com/p/how-dick-cheney-could-matter>
Over and over again in history, plutocrats have been overeager to believe that charismatic kleptocrats and ideologues are their friends. They are not. Charismatic kleptocrats and ideologues wind up, sooner or later and it is almost always sooner, regarding plutocrats as their lawful prey…
Steven Greenhouse: Billionaires are endorsing Trump—but is that a bad bargain for them?: ‘Experts are issuing stern warnings about business support for Trump—it could backfire badly and endanger democracy…. From Wall Street to Silicon Valley… Stephen Schwarzman… Steve Wynn… Bill Ackman…Marc Andreessen…. Witold Henisz…. “The best info they have is what happened in the last Trump administration,” Henisz said. “They got tax breaks, and nothing really terrible happened. The world didn’t end…. That’s a mispricing of the tail risks…. The ultimate tail risk is change in political institutions that makes the US more authoritarian and less democratic, with restraints on media freedom and the political use of tax authorities and the judicial system” against people and corporations Trump dislikes… <https://www.theguardian.com/us-news/article/2024/sep/06/trump-billionaires-2024-campaign>Public Reason: Is “liberalism” simply too big and too self-contradictory to be in any sense a thing?:
Amicus: Liberalism Is a Plural Noun: ‘Consider rights…. For Bentham, these are legal constructs with a practical aim…. For Thomas Paine, rights were written into the laws of nature…. For William Lloyd Garrison… rights… [were] a higher law, written in the hearts of men. These are not the same concept. They bear a loose family resemblance—but no more so to one another than to the right of labor to all that it creates, or the right of the politai of Athens to speak and be heard…. Are these thinkers part of a single liberal tradition, while Athens remains pre- and the utopian socialists non-? Continuity can disqualify Pericles, but not Proudhon; an austere individualism can bar them both, but catches Hobbes and Tocqueville too. Hobbes… we can do without…. Perhaps we can even dispense with Tocqueville. But if Paine and Bentham are not both liberals, then of what use is the word?… There is a common thread that… you can call… “liberalism”… but… it’s just modernity. Marx belongs to it as much as Mill; it claims Proudhon, and Owen too. The inheritance of Rousseau and Montesquieu is the common heritage of all mankind, and its proper heirs are all those who would defend Man qua Man against all the creatures of the past. There is no such thing as liberalism: only liberalisms, or else the Enlightenment, of which the Left is the best and truest heir. But that story, too, will have to wait… <https://homosum.substack.com/p/liberalism-is-a-plural-noun>