Category: Current Affairs

Germany fact of the day

Germany owns no nuclear weapons. It renounced the very idea when it reunified in 1990. But if war were to break out in Europe today, German pilots could clamber into German planes, take off from Büchel Air Base in Rhineland-Palatinate and drop nuclear bombs on Russian troops.

The Luftwaffe can do that thanks to Nato’s nuclear-sharing scheme, under which America quietly stations nuclear bombs across five countries in Europe.

Here is more from The Economist, mostly covering Turkey and the tactical nuclear weapons stored there.

Principles for Amazon (and other?) censorship

That is the topic of my latest Bloomberg column, here is one excerpt:

Focus on whether the merchandise contributes to further understanding, one way or another, rather than whether it might embody evil.

And:

This principle runs counter to how the world of social media works, I realize. “Cancel culture” tends to issue decisions based on the worst aspects of a product, writer or public figure, because that is what is endlessly circulated and condemned. But there is another way of thinking about the problem — namely, by focusing on the positive.

It is still possible, for example, to buy Adolf Hitler’s “Mein Kampf” on Amazon, either through third-party merchants or Amazon itself. That book is more offensive than an Auschwitz bottle opener, as it directly calls for the extermination of the Jews and the conquest of Europe, and it probably still inspires neo-Nazis today. Nonetheless, I hope “Mein Kampf” continues to be for sale.

For all of its evil, “Mein Kampf” is an essential document for understanding the rise of Nazism and Hitler. As such, it should be allowed in spite of its potential downside. There is both intrinsic and utilitarian value in maximizing public access to as much knowledge as possible.

In contrast, it is hard to argue that an Auschwitz-themed mouse pad has anything positive to offer, whether to our historical knowledge or otherwise. At best, it is an act of obnoxious trolling and thus it was appropriate for Amazon to take it down.

It is fine to watch Leni Riefenstahl and listen to Richard Strauss, for instance.  But most private platforms — if they can — should ban sheer trolls.

Is Cebu the most typical city in the world?

Yes, Cebu, Philippines.  That is the topic of my latest Bloomberg column, here is one excerpt:

Now consider some non-economic factors. What is the world’s most important and widely spoken language? English. Along with the native Cebuano and Tagalog, English is widely spoken in Cebu, and present on most of the signs. And what about religion? Christianity registers as the most common religion in the world, and the dominant religion in Cebu is — you guessed it — Christianity.  Islam, Hinduism and various native religions are also represented, as well as variants of folk Catholicism and folk Islam, mirroring the syncretic nature of religious belief in so many other countries.

Asia is the world’s most populous continent by far, and the Philippines (of course) is in Asia. Score another point for the typicality of Cebu. Yet there are also Spanish and Spanish colonial influences, and at times I felt like I was in Latin America more than Asia. That broadens the global connections of Cebu.

Also notable is Cebu’s North American heritage, as the Philippines was a de facto U.S. colony from 1898 to 1935. The native culture is still very much its own, but there are more superficial markers of U.S. cultural influence in Cebu, and in the Philippines more generally, than in almost any other emerging economy. There are lots of fast food restaurants, American casual dress is widespread, and basketball is much beloved.

What else? Most of the world’s population now lives in cities, and Cebu is the second largest metropolitan area in the Philippines.

Cebu is also pretty close to global median income.  And here is the penultimate line:

I therefore nominate a 30-year-old Cebu mother as the epicenter of human existence.

Rico Lechon and Cafe Laguna are two places you might consider eating at.

The First Words of Thanksgiving

When the Pilgrims landed at Plymouth rock in 1620 they were cold, hungry and frightened. Imagine their surprise when on March 16 as they unloaded cannon from the Mayflower in preparation for battle an Indian walked into their encampment and asked, “Anyone got a beer?” Seriously, that’s what happened. Samoset, the thirsty Indian, had learned English from occasional fishermen.

Even more fortunate for the Pilgrims was that Somoset was accompanied by Squanto. Squanto had been enslaved 7 years earlier and transported to Spain where he was sold.  He then somehow made his way to England and then, amazingly, back to his village in New England around 1619. It’s a horrific story, however, because during his absence Squanto’s entire village and much of the region had been wiped out by disease, almost certainly brought by the Europeans. Nevertheless, in 1621 Squanto was there when the Pilgrims landed and he hammered out an early peace deal and most importantly instructed the settlers how to fertilize their land with fish in order to grow corn.

Squanto instructed them in survival skills and acquainted them with their environment: “He directed them how to set their corn, where to take fish, and to procure other commodities, and was also their pilot to bring them to unknown places for their profit, and never left them till he died.”

Anyone got a beer?

 

An American Thanksgiving story without any heroes

That is the topic of my latest Bloomberg column, here is one excerpt:

But as Thanksgiving 2019 approaches, I am struck by another lesson: America’s need to come to terms with a history that, as it relates to the treatment of Native Americans, has remarkably few heroes on the side of the white settlers.

And:

Nor is there any major American political ideology that can sit comfortably with the historical treatment of Native Americans, which has been multipartisan in its awfulness. Many libertarians fail to decry the government coercion involved, since they also wish to invoke the growth of the American republic as a major event in the history of freedom. Even if most libertarians are embarrassed by how much of America’s glory is rooted in land theft and massacres, they do not emphasize land reparations as a solution.

And:

This lack of heroes should also make Americans more reluctant to judge their political opponents so harshly. All of us are part of a system built on longstanding historical crimes, and thus we have more in common with those opponents than we might like to think.

Recommended.

My Conversation with Mark Zuckerberg and Patrick Collison

Facebook tweets:.

@patrickc, CEO of Stripe, and @tylercowen, economist at George Mason University, sit down with our CEO, Mark Zuckerberg to discuss how to accelerate progress.

Video, audio, and transcript here, part of Mark’s personal challenge for the year, an excellent event all around.  This will also end up as part of CWT.

On fentanyl, from the comments

I always find it helpful to recall that the US was the not the first country to be hit by fentanyl. Estonia, for instance, had a massive wave of fentanyl deaths that started before the US, without all the US prescription opioid consumption, and peaked sooner. Currently, their opioid supply has moved beyond fentanyl to derivatives that are even less safe.

It seems to me that the problem was not overprescription per se. Rather, as in Estonia, there seems to be spiral where opioids are seen as acceptable drugs of abuse (entering into the space of marijuana, alcohol, tobacco, and ecstasy), illicit suppliers elect to increase the addictiveness and potency of their drugs, and we end up with much more deadly drugs.

The biggest problem US docs created was removing the social stigma against opioid use and abuse. We created a perception that being addicted to opioids was no big deal, mostly safe, and something that people could do without losing all their social standing.

Does decriminalization work? Nowhere near as well as cultural barriers. Portugal, for instance, has safe injection and all the rest, yet it is experiencing a new wave of heroin use as old addicts return to heroin thanks a weakened economy. And lest we forget the difference in price for legitimate opioids and heroin/fentanyl is not all that high. Legitimate heroin supplies are going to cost at least as much as black market opioids so I suspect we will still have a lot of users who end up on fentanyl derivatives (for which there are no safe prescribing guidelines, nor even data for simple things like LD-50).

As with most major problems, the cause and solution are likely to be social. Historically, these sorts of epidemics die down as people die and the younger users decide to not try the things that killed all their older peers. Quite possibly all our “harm reduction” strategies and treatments will delay this process and leave more people dead; a first pass analysis of mass naloxone treatment suggested that it was associated with difference in difference increase in the opioid death rate due to increased use.

Unfortunately, I see no way out of the current situation that does not risk leaving many, possibly more than current rates, people dying.

That is from a commentator named Sure.

China fact of the day

China is set to add new coal-fired power plants equivalent to the EU’s entire capacity, as the world’s biggest energy consumer ignores global pressure to rein in carbon emissions in its bid to boost a slowing economy.

Across the country, 148GW of coal-fired plants are either being built or are about to begin construction, according to a report from Global Energy Monitor, a non-profit group that monitors coal stations. The current capacity of the entire EU coal fleet is 149GW.

While the rest of the world has been largely reducing coal-powered capacity over the past two years, China is building so much coal power that it more than offsets the decline elsewhere.

Here is more from Leslie Hook at the FT.

My podcast with Shaka Senghor

Here is the audio and transcript, this was one of the “most different” Conversations with Tyler and also one of the most interesting.  Here is part of the summary introduction:

Shaka joined Tyler to discuss his book Writing My Wrongs: Life, Death, and Redemption in an American Prison, what it was like to return to society not knowing the difference between the internet and a Word document, entrepreneurialism and humor in prison, the unexpected challenges formerly incarcerated people face upon release, his ideas for helping Detroit, what he connects with in Eastern philosophy, how he’s celebrating the upcoming anniversary of his tenth year of freedom, and more.

Here is one excerpt:

SENGHOR: Early, when I first went to prison, you can get all types of books. As I got deeper into my prison sentence, they started banning a lot of those books. Malcolm’s book is probably one of the most popular books in prison because it’s, to me, the one book about personal transformation that just permeates that environment. And it doesn’t matter whether you’re black, white, Native American, whatever. It’s something about his redemptive story that just resonates with people who are incarcerated.

Oftentimes, we exchanged books with each other, and we would buy books. I would order books from different outlets that sold books to men and women in prison. The prison library — it varies from prison to prison. Some are better than others.

Back in the day, you used to get books donated by people. They will have estates, and they would just say, “Hey, let’s donate these to the local prison.” But now it’s becoming more and more restrictive in terms of what you can read, specifically around books that reflect black culture, which was really something that was shocking to me.

A lot of those books I read in the early stages of my incarceration are now banned. You can’t get Donald Goines books the way that you used to. Their excuse is that it talks about crime and things like that. But I’m like, “You can’t get that, but you can get Stephen King, which is murder and mayhem.”

COWEN: Can you get Shakespeare? That’s also murder and mayhem.

SENGHOR: Yeah, murder and mayhem. Yeah, you can definitely get all the Shakespearean classics and things like that. This just reflects the contradictions in larger society.

COWEN: I think you were seven years total in solitary, in one period of four years running. Toward the end of that four-year period, did you feel like you were going crazy? Or did you have some greater, stoic sense of calm?

And:

COWEN: The individuals who are incarcerated — what are their senses of humor like? Is it different on the inside or just the same? Are they funnier?

SENGHOR: It is probably one of the most fascinating, quick-witted spaces you can imagine. I did an interview some years back with Trevor Noah, and I remember telling him like, “Prison is hilarious.” And he was like, “No, no, no. That doesn’t seem like quite a good narrative.” [laughs] But what I would always explain to people is that you can’t survive that environment without the ability to laugh at the absurdity of it, the ability to laugh at the craziness of it, the creativity of it.

And you have some brilliant, brilliant comedians in that environment. There’s actually a comedian who’s free now, Ali Siddiq, who’s just an incredible storyteller, and he’s a great comedian. And that talent is abundant in that environment. Guys crack jokes all the time. The officers crack jokes. It’s one of the things that is universal — laughter — and you need that in order to survive hardship.

My favorite part of the dialogue starts with this:

COWEN: It seems to me, from my great distance, that a lot of men in prison have women on the outside who are very strongly attracted to them. How do you think about that? Why do you think there’s a special attraction to men in prison?

His answer was excellent, but too long to reproduce here.

Are central banks manipulating asset prices?

That case still needs to be made, here is Cullen Roche:

1) Are Central Banks “pushing money” on people? 

The whole premise of the first paragraph is that Central Banks have implemented QE and forced money onto people which has resulted in a lot of asset chasing.¹ I’ve never understood this mentality to be honest. When the Fed engages in QE they expand their balance sheet and buy a bond from the private sector. In a low inflation environment bonds become increasingly similar to cash so these sellers of bonds are selling one cash-like instrument for another. As a result, the private sector ends up holding more low interest bearing cash-like instruments and the Fed holds higher interest bearing cash-like instruments. So the whole basis of this theory is that if someone who was already holding a risk averse asset then sells that risk averse asset for something very similar then they will suddenly become less risk averse and run out and drive up stocks? That doesn’t even make sense. If I have a moderate risk tolerance and hold a portfolio of 50% bonds and 50% stocks and I want to sell my bonds because I read a scary article about how bonds are super risky because interest rates are going to rise (more on this later) then I will swap out some part of my 50% bonds for cash or something else that’s relatively low risk (to maintain my moderate risk profile). I don’t swap out my whole bond position for a stock position or a role of the dice at the roulette wheel.

Anyhow, the evidence doesn’t even mesh with this. Global Central Banks have been implementing QE for 10 years now. The average annual return of the Vanguard Total World Index is 8.9% per year over that period. That is 0.02% higher than the average 35 year return. So, if investors are acting crazy today then they’ve been crazy for 35 years. Which might be true. It’s probably true. I actually think investors are usually kind of crazy. But they’re not any crazier today than they were 35 years ago.

Sensible throughout.

*The Decadent Society*

The author is Ross Douthat and the subtitle is How We Became the Victims of Our Own Success.  Excellent book!  It has a real dose of Peter Thiel (and some Tyler Cowen), and most of it comes as fresh material even if you have read all of Ross’s other columns and books.  Imagine the idea of technological stagnation tied together with a conservative Catholic critique of decadence, and in a convincing manner with a dose of pro-natalism tossed in for good measure.  There is commentary on Star Wars, Back to the Future, Jordan Peterson, and much more.

America’s problems are not what you think they are!

Definitely recommended, due out February, and you can pre-order here.

A Coasean solution for New Delhi?

If the late Ronald Coase could be called upon to advise the Delhi government, he would persuade chief minister Arvind Kejriwal to pay farmers in Punjab and Haryana to stop burning crop residue.

In recent times, air quality in Delhi has remained poor throughout the year for various reasons, including the rapid loss of green cover, construction of homes and infrastructure projects, and vehicular as well as industrial pollution. But for a few weeks every November, it gets almost impossible to breathe. The last straw has been the crop residue burning (CRB) by farmers in Punjab and Haryana, which causes a heavy smog to settle over Delhi…

The good news is that these [health] costs—avoidable by Delhi residents if CRB were eliminated—are about 10 times the cost that would be incurred by farmers in adopting substitutes to crop burning. Where policymakers see costs, Coase saw potential for gains from trade.

Here is more from Shruti Rajagopalan.

“OK Boomer”

That is the topic of my latest Bloomberg column, how can I excerpt this one?:

On the negative side, I worry that those who deploy “OK Boomer” are putting themselves down and signaling their own impotence. I am not arguing for “[Expletive Deleted] Boomer,” even though it would have a vitality and rebellious spirit very much reminiscent of the 1960s or 1970s (which of course were quintessential boomer eras). But when I read or hear “OK Boomer,” I start to think there might be something special about baby boomers after all. We boomers may not be different in kind from other generations, but we do seem to inspire rhetorical creativity in our critics.

The closest earlier analog to “OK Boomer” is probably “OK, Chief,” a slightly sardonic response to a bossy or persistent request. So the phrase “OK Boomer” is itself an implicit and indeed somewhat passive admission as to who is really in charge. Members of Gen Z are subtly demonstrating that the clichés about them may have a grain of truth.

As I said I am a baby boomer, born in 1962, and I do a lot of public speaking about such topics as the absence of free lunches in this world. Yet I have never heard anyone say “OK Boomer” back to me. Instead I see the phrase on social media — another sign of the essentially passive nature of the response. (And wearing an “OK Boomer” hoodie or buying other such merchandise doesn’t seem like a major sign of rebellion, either.)

If there is any native medium for the “OK Boomer” meme, in fact, it is short TikTok videos, one of the more evanescent forms of social media. That the site seems plagued by Chinese censorship is just another state of affairs that boomers find more offensive than does Generation Z.

There is also this:

I am greatly pleased that the post-boomer generations are by all appearances less racist and sexist than their predecessors. Still, prejudices are part of human nature. There is always a danger that they will re-emerge, redirected at other targets — defined by their age, their political views, their wealth, the size of their carbon footprint, or some other salient variable. Prejudice doesn’t become acceptable simply because it is not directed at someone’s race, ethnicity or gender.

There is indeed much more at the link.  A better cause for young people would be to fight against the growing age segregation in American society.

Revisiting NSA Spying

In 2013 in light of the Snowden revelations about NSA spying I wrote, Did Obama Spy on Mitt Romney?

Did Obama spy on Mitt Romney? As recently as a few weeks ago if anyone had asked me that question I would have consigned them to a right (or left) wing loony bin. Today, the only loonies are those who think the question unreasonable. Indeed, in one sense the answer is clearly yes. Do I think Obama ordered the NSA to spy on Romney for political gain? No. Some people claim that President Obama didn’t even know about the full extent of NSA spying. Indeed, I imagine that President Obama was almost as surprised as the rest of us when he first discovered that we live in a mass surveillance state in which billions of emails, phone calls, facebook metadata and other data are being collected.

The answer is yes, however, if we mean did the NSA spy on political candidates like Mitt Romney. Did Mitt Romney ever speak with Angela Merkel, whose phone the NSA bugged, or any one of the dozens of her advisers that the NSA was also bugging? Did Romney exchange emails with Mexican President Felipe Calderon? Were any of Romney’s emails, photos, texts or other metadata hoovered up by the NSA’s break-in to the Google and Yahoo communications links? Almost certainly the answer is yes.

As I read the situation, mass government surveillance has now become accepted in America, as in China. This bit remains relevant:

Did the NSA use the information they gathered on Mitt Romney and other political candidates for political purposes? Probably not. Will the next president or the one after that be so virtuous so as to not use this kind of power? I have grave doubts. Men are not angels.

Can we spend another $52 trillion without raising middle class taxes?

The question seems like a joke, right?  Yet because so much of our elite media class wants Elizabeth Warren to win, they are contorting themselves into every possible direction to make this one sound coherent.  It is not a question of whether total nominal expenditures on health care go up or down, but rather of thinking through incidence and opportunity cost and where the real burdens of the plan will fall.  Those are the core themes of my Bloomberg column, here is one excerpt:

Another part of the plan is to pay lower prices — 70% lower — for branded prescription drugs. That is supposed to save about $1.7 trillion, but again focus on which opportunities are lost. Lower drug prices will mean fewer new drugs are developed. There is good evidence that pharmaceuticals are among the most cost-effective ways of saving human lives, so the resulting higher mortality and illness might be especially severe.

And the close:

Warren’s proposals, when all is said and done, are best viewed not as a way of paying for her program but as a series of admissions about just how expensive it would be. Whether or not you call those taxes, they are very real burdens — and many of them will end up falling on the middle class.

By the way, here is a good NYT summary of Warren’s financing plan.  Here is a good Maxim Jacobs tweet:

It’s really hard to pick out which part of her plan is most insane?: – Lowering brand drug pricing by 70%? – CMS paying specialists less money – Taxing unrealized capital gains – Claim hiring more IRS agents will raise $2.3 trillion – “Not one penny in middle-class tax increases”

Here is more from Peter Suderman.