Current Affairs

…only a tiny fraction of all living Americans ever convicted of a felony is actually incarcerated at this very moment. Quite the contrary: Maybe 90 percent of all sentenced felons today are out of confinement and living more or less among us. The reason: the basic arithmetic of sentencing and incarceration in America today. Correctional release and sentenced community supervision (probation and parole) guarantee a steady annual “flow” of convicted felons back into society to augment the very considerable “stock” of felons and ex-felons already there. And this “stock” is by now truly enormous.

…Very rough calculations might therefore suggest that at this writing, America’s population of non-institutionalized adults with a felony conviction somewhere in their past has almost certainly broken the 20 million mark by the end of 2016. A little more rough arithmetic suggests that about 17 million men in our general population have a felony conviction somewhere in their CV. That works out to one of every eight adult males in America today.

That is by Nicholas N. Eberstadt, via Arnold Kling.  The broader piece is a useful litany of everything that has gone wrong since 1999 in this country.

Here is one bit from an excellent longer piece by Michael Kofman:

Russia’s gradual approach is inherently vulnerable, since it is based around fielding the bare minimum amount number of troops in the battlespace to achieve desired political ends.  In order to deter and dissuade peer adversaries Russia  will often introduce high-end conventional capabilities, such as long range air defense, anti-ship missiles, and conventional ballistic missile systems.  These weapons are not meant for the actual fight. Instead, they are intended to make an impression on the United States. The first goal of the Russian leadership is to make the combat zone its own sandbox, sharply reducing the options for peer adversaries to intervene via direct means.  America does this in its campaigns by attaining air superiority. Russia’s method is cheaper: area denial from the ground.

…Beyond its political objectives, Russia places strong emphasis on having an exit strategy.  In fact, a viable exit strategy seems just as important than whatever they are trying to achieve.  It is perhaps one key point where Russia’s leaders would agree with Weinberger and Colin Powell. But unlike the United States, they actually practice it.

The pointer is from the always-astonishing The Browser.

The Indonesian woman arrested for suspected involvement in the killing of the North Korean leader’s half brother in Malaysia was duped into thinking she was part of a comedy show prank, Indonesia’s national police chief said Friday, citing information received from Malaysian authorities.

Tito Karnavian told reporters in Indonesia’s Aceh province that Siti Aisyah, 25, was paid to be involved in “Just For Laughs” style pranks, a reference to a popular hidden camera show.

He said she and another woman performed stunts which involved convincing men to close their eyes and then spraying them with water.

Here is the story, via Ray Lopez.

That is in the FT, here is the closing paragraph:

In most other ways, Cowen’s thesis is deeply troubling. Democracy requires growth to survive. It must also give space to society’s eccentrics and misfits. When Alexis de Tocqueville warned about the tyranny of the majority, it was not kingly despotism that he feared but conformism. America would turn into a place where people “wear themselves out in trivial, lonely, futile activity”, the Frenchman predicted. This modern tyranny would “degrade men rather than torment them”. Cowen does a marvellous job of turning his Tocquevillian eye to today’s America. His book is captivating precisely because it roves beyond the confines of his discipline. In Cowen’s world, the future is not what it used to be. Let us hope he is wrong. The less complacent we are, the likelier we are to disprove him.

The review very well captures the spirit and content of the book.  Here is Barnes&Noble, here is Amazon.  Here are signed first editions, here is Apple.

Senior state department officials who would normally be called to the White House for their views on key policy issues, are not being asked their opinion. They have resorted to asking foreign diplomats, who now have better access to President Trump’s immediate circle of advisers, what new decisions are imminent.

…“My nagging suspicion is that the White House is very happy to have a vacuum in the under-secretary and assistant secretary levels, not only at state but across government agencies, because it relieves them of even feeling an obligation to consult with experts before they take a new direction.”

Here is the article, solve for the equilibrium…

Here are some names that could fit the bill according to the folks at DB:

Kevin Warsh – currently a visiting fellow at the Hoover Institution, he served on the Board of Governors from 2006 until 2011. The report described him as “an experienced private financial market practitioner with strong Republican credentials”.

Jerome Powell – a current Fed governor “viewed as having conventional/centrist views about the economy and markets with slightly hawkish leanings”.

John Taylor – an economics professor at Stanford whose views “would fit with Republican views for a more rules-based Fed.” But, the report added, “his policy leanings — more aggressive rate increases and the stronger dollar that would result — would work against Trump’s pro-growth agenda.”

John Cochrane – another professor, from the University of Chicago with conservative leanings, whose “recent research has delved into more unorthodox topics, such as whether Fed policy rates and inflation could be positively related, i.e., that low policy rates may lead to low inflation and vice versa.”

That is from Jessica Dye at the FT, expect the list of names to evolve with time.

That is the theme of my latest Bloomberg column, here is the opening bit:

“Why should it be different this time?” That’s the most common response I hear when I raise concerns about automation and the future of jobs, and it’s a pretty simple rejoinder. The Western world managed the shift out of agricultural jobs into industry, and continued to see economic growth. So will not the jobs being displaced now by automation and artificial intelligence lead to new jobs elsewhere in a broadly similar and beneficial manner?


Consider, for instance, the history of wages during the Industrial Revolution. Estimates vary, but it is common to treat the Industrial Revolution as starting around 1760, at least in Britain. If we consider estimates for private per capita consumption, from 1760 to 1831, that variable rose only by about 22 percent. That’s not much for a 71-year period. A lot of new wealth was being created, but economic turmoil and adjustment costs and war kept down the returns to labor. (If you’re wondering, “Don’t fight a major war” is the big policy lesson from this period, but also note that the setting for labor market adjustments is never ideal.)

By the estimates of Gregory Clark, economic historian at the University of California at Davis, English real wages may have fallen about 10 percent from 1770 to 1810, a 40-year period. Clark also estimates that it took 60 to 70 years of transition, after the onset of industrialization, for English workers to see sustained real wage gains at all.

From that turmoil, we also received Marxism and agricultural subsidies for generations!  Do read the whole thing

China has banned almost 7m people from taking flights and high-speed trains over the past four years as a penalty for not repaying their debts, the country’s Supreme Court has announced.

The penalty system is part of efforts to build a nationwide “social credit” system that will eventually rate every Chinese citizen by collecting big data on financial, legal or social misdeeds. The debtors’ travel ban has been touted as an important first step for building the structural links needed to implement such a comprehensive monitoring programme.

“We have signed a memorandum . . . [with over] 44 government departments in order to limit ‘discredited’ people on multiple levels,” Meng Xiang, head of the executive department of the Supreme Court, told state media on Wednesday.

…In addition to not paying debts on time, one can also be blacklisted for lying in court, hiding one’s assets and a host of other crimes. The Supreme Court said on Tuesday it was working on adding new forms of penalties.

Here is the FT story by Yuan Yang.  Keep in mind that the country does not have a real personal bankruptcy law, nor well-developed credit institution penalties, so this is viewed as one of the few options available.

One of my favorites, David was great, here is the link to the podcast, video, and transcript.  Here is the opening summary of the chat:

Named one of the most influential Jewish thinkers of our time, Rabbi David Wolpe joins Tyler in a conversation on flawed leaders, Jewish identity in the modern world, the many portrayals of David, what’s missing in rabbinical training, playing chess on the Sabbath, Srugim, Hasidic philosophy, living in Israel and of course, the durability of creation.

Here are a few bits:

WOLPE: So as my friend Joseph Telushkin says, “Polygamy does exist in the Bible, it’s just never successful.” David does have many wives, and very strained and interesting and complex relationships with women. David has the most complicated and most described relationships with women of any character in the Hebrew Bible.

Those qualities that can be negative, in David are to some extent positive. One of the things that draws David out of the charge of simple narcissism is that he really listens, he pays attention — he pays attention to women over and over again. He listens to what they say and changes himself because of it. And that’s not a characteristic of men in the ancient world or the modern one that you can rely on.


COWEN: So again, I’m an outsider in this dialogue, but say I were thinking of converting to Judaism and I were asking you about Hasidic philosophy. Now in terms of some social connections, I probably would fit better into your congregation than into a Hasidic congregation. But if I ask you, on theological grounds alone, is there a reason why I should be hesitant about Hasidic philosophy? From the point of view of theology, what do you think is the greatest weakness there, or your biggest difference with it, given how much you like Heschel?


COWEN: How would you alter or improve rabbinical training?

WOLPE: I’ve given this a lot of thought. Let me just mention one area. When I speak to rabbinical students, I tell them all the time that the single most valuable commodity you have as a rabbi . . . you can answer that yourself, and then I’ll tell you what I think: your voice. Most people are going to come in contact with you when you speak to them. Not all of them, but most. There’ll be more people who come to your services than the number of people at whose bedside you will sit as they die.

And yet, most rabbis — most people — don’t know how to speak.

There is much more at the link, including about Israeli TV, where to visit in Israel, whether King David parallels Trump, the future of biblical commentary in a world of context-less social media, whether Canadian Jews are more likely to stick with the faith, whether Los Angeles is underrated, what is beautiful and significant in Islam, and the Iran nuclear deal and the settlements, among other topics.  Self-recommending…

And again, here is David Wolpe’s most recent book David: The Divided Heart, which was the centerpiece for the first part of the discussion.

There is a new NBER paper on this topic by Alexander Wagner, Richard J. Zeckhauser, and Alexandre Ziegler, here is the abstract:

The election of Donald J. Trump as the 45th President of the United States of America on 11/8/2016 came as a surprise. Markets responded swiftly and decisively. This note investigates both the initial stock market reaction to the election, and the longer-term reaction through the end of 2016. We find that the individual stock price reactions to the election – that is, the market’s vote – reflect investor expectations on economic growth, taxes, and trade policy. Heavy industry and banking were relative winners, whereas healthcare, medical equipment, pharmaceuticals, textiles, and apparel were among the relative losers. High-beta stocks and companies with a hitherto high tax burden benefited from the election. Although internationally-oriented companies may profit under some plans of the new administration, several other arguments suggest a more favorable climate for domestically-oriented companies. Investors have found the domestic-favoring arguments to be stronger. While investors incorporated the expected consequences of the election for US growth and tax policy into prices relatively quickly, it took them more time to digest the consequences of shifts in trade policy on firms’ prospects.

Having read through the paper, this does not to me look mainly like a shift from consumers (domestically-oriented and retail stocks are doing well enough).  It is closer to “companies overall benefit from greater wealth creation, though some will benefit considerably more than others, with some trade worries built in.”  The tax component is significant.

Again, the market is often wrong, but this is at the very least a…um…”public relations problem” for the Democrats.  The worse you think Trump is, the worse this problem becomes!

And please, don’t tell me on Twitter about the stock market not predicting your favorite catastrophe from history.  That point would not pass through an Intro to Stats course intact.

Jeremy McLellan is a comedian but like all great comedians he captures truths and complexities underneath the laughs.

Valentine’s Day is a just a fake holiday invented by Hallmark to sell greeting cards. So what have you invented recently to make people happy? Nothing, that’s what!

In three lovely sentences McLellan recaps Hayek versus Galbraith on the nature of advertising, consumer demand and entrepreneurship. Entire dissertations could be written parsing this out.

I had heard and read so much about Dugin but had never read him.  The subtitle is Introduction to Neo-Eurasianism, and here were a few of my takeaway points:

1. His tone is never hysterical or brutish, and overall this comes across as scholarly (except for the appended pamphlet on “Global Revolution”), albeit at a semi-popular level.

2. He is quite concerned with tracing the lineages of Eurasian thought, thus the “neo” in the subtitle.  Nikolai Trubetzkoy gets a lot of play.  The correct theories of history are cyclical, and the Soviet Union was lacking in spiritual and qualitative development and thus it failed.

3. Dugin is a historical relativist, every civilization has different principles of development, and we must take great care to understand the principles in each case.  Ethnicities and peoples represent “inestimable wealth” and they must be preserved against the logic of a globalized, unipolar world.

4. Geography is primary.  Russia-Eurasia is a “steppe and woods” empire, whereas America is fundamentally an Atlantic, seafaring civilization.  Globalization tries to universalize what is ultimately quite a culture-specific point of view, stemming from the American, Anglo, and Atlantic mindsets.

5. Eurasian philosophy ultimately can contain, in a Hegelian way, anti-global philosophies, as well as the contributions of Foucault, Deleuze, and Debord, not to mention List, Gesell, and Keynes properly understood.

6. “It is vitally imperative for Turkey to establish a strategic partnership with the Russian Federation and Iran.”

7. The integration of the post-Soviet surrounding territories is to occur on a democratic and voluntary basis (p.51).  The nation-state is obsolete, so this is imperative as a means of protecting ethnicities and a multi-polar world against the logic of globalization.  Nonetheless Russia is to be the leader of this process.

8. “America’s influence is the most negative tendency in the world…”, and American think tanks and the media are part of this harmful push toward a unipolar world; transhumanism is worse yet.  Tocqueville, Baudrillard, and Dugin are the three fundamental attempts to make sense of America.  The Statue of Liberty resembles the Greek goddess of hell, Hecate.

9. The Eurasian economy must be subjugated to “higher civilizational spiritual values.”  City-dwellers are often a problem, as they too frequently side with the forces of globalization.

10. “Japan…is the objective leader of the Pacific.”  It must be liberated from the Atlanticist sphere of influence.  Nary a nod to China.

11. On Moldova: “Archaic?  Let it be archaic.  It’s great!”  At times he does deviate from #1 on this list.

12. Putin is his own greatest enemy because he leans too far in the liberal direction.

13. Dugin enjoys writing with bullet points.

14. “Soon the world will descend into chaos.”

Apart from whatever interest you may hold in these and other particulars, this is a good book for rethinking the notion of intellectual influence.  Very very few Anglo-American intellectuals have had real influence, but Dugin has.  That is reason enough to read this tract.

Addendum: Here is good background on what Dugin is up to these days.  His current motto: “Drain the swamp.”

What would you think of a Western democratic leader who was populist, obsessed with the balance of trade, especially effective on television, feisty and combative with the press, and able to take over his country’s right-wing party and swing it in a more interventionist direction?

Meet Robert Muldoon, prime minister of New Zealand from 1975 to 1984. For all the comparisons of President Donald Trump to Mussolini or various unsavory Latin American leaders, Muldoon is a clearer parallel case.

Here is the full Bloomberg column, much more at the link.

A while ago I had some email with Noah Smith on this topic, now we are getting somewhere, this is from a new NBER working paper by Daniel M Hungerman, Kevin J. Rinz, and Jay Frymark:

We use a dataset of Catholic-parish finances from Milwaukee that includes information on both Catholic schools and the parishes that run them. We show that vouchers [funded by the government] are now a dominant source of funding for many churches; parishes in our sample running voucher-accepting schools get more revenue from vouchers than from worshipers. We also find that voucher expansion prevents church closures and mergers. Despite these results, we fail to find evidence that vouchers promote religious behavior: voucher expansion causes significant declines in church donations and church spending on non-educational religious purposes. The meteoric growth of vouchers appears to offer financial stability for congregations while at the same time diminishing their religious activities.

I’ve long maintained that the fiscal effects of vouchers, if they were implemented on a much larger scale, are the elephant in the room.  For better or worse.

The White House Council of Economic Advisers is being demoted by the Trump administration, which said in a statement Wednesday that the president’s cabinet won’t include the chairman of the CEA, an official that President Donald Trump also has yet to name.

The diminished stature for the CEA, which was part of President Barack Obama’s cabinet and has advised presidents for over seven decades on the economic impact of their policies, means Mr. Trump will likely rely more heavily on other advisers, such as Gary Cohn, the former Goldman Sachs president who is head of the National Economic Council, and Peter Navarro, the trade critic who is leading the National Trade Council.

Here is more from Josh Zumbrun at the WSJ.