Thursday, August 27, 2020

"The best you can hope for" is not the same as "good"

I googled 2% growth is good growth. The featured snippet, attributed to Revenue Rocket, says
Most economists generally peg good economic growth in the 2 percent to 4 percent range of GDP, with the historical average around 2.5 percent annually.
You might think that if the range is from 2% to 4% the average would be around 3%, but no.

You might think that if the average is around 2.5% the range would be 2% to 3%, but again no. Or maybe not 2% to 3%, maybe 1% to 4%. But I suppose nobody thinks 1% growth is "good" growth.

I think the 4% number they report is a holdover from times past. At The Balance they say
Many economists place the ideal GDP growth rate at between 2%-3%.
At Marketplace they say
A healthy GDP rate would be about 2 to 3 percent...
The consensus is that once you’ve caught up with the frontier, the high-income countries, it’s harder to grow fast,” Boal said. “Two to 3 percent means we’re growing faster than the population, which is good. That’s how things have been going pretty much in the last 20 years or so.
That's dated January 2019; 20 years puts us back at 1999 or 2000. So the 2% to 3% range holds for say 2000 to the present time.

I looked up average GDP growth rate where the featured article, from Trading Economics, says:
GDP Annual Growth Rate in the United States averaged 3.14 percent from 1948 until 2020...
But if 3.14% is the "average", "good" growth must be more than that.

And if growth has been between 2% and 3% for the last 20 years, then growth in the earlier years must have been higher, to make the average go above 3%.

Currently, Trading Economics says this:
The United States is the world’s largest economy. Yet, in the last two decades, like in the case of many other developed nations, its growth rates have been decreasing. If in the 50’s and 60’s the average growth rate was above 4 percent, in the 70’s and 80’s dropped to around 3 percent. In the last ten years, the average rate has been below 2 percent and since the second quarter of 2000 has never reached the 5 percent level.
Growth in the early years was higher. Now the picture's coming into focus. GDP growth has been declining. And average GDP growth has been declining.

And the growth rate that economists say is "good" growth has also been declining. If you can't fix the economy by making it better, you can always make it sound better by lowering the bar.

Maybe when the pandemic is over economists will start saying 1% growth is good growth.

Me? I say 4% or better is good growth. I'm a holdover from times past.

You want to remember that GDP is a measure of income. If you want more income then you want a bigger share of GDP ... or the same share, from a growing GDP.

When you say we don't need growth you are saying either "I don't want more income", or "I want to make my share bigger by making someone else's share smaller." I don't accept either view. And the idea of making other people's shares smaller so you can have more, that's not a popular view. It's a way of saying inequality is great as long as it's in your favor. But a lot of people are mighty upset about inequality.

I think the only choice is to get more growth. So, for crying out loud, stop lowering the bar on what constitutes "good" growth.

Sunday, August 23, 2020

Before the Great Inflation: The Cost of Finance

Below, two graphs from an old post. Recall that after World War Two, the "post-war golden age" ran from about 1947 to about 1973. Recall also that the so-called "Great Inflation" ran from about 1965 to the early 1980s. The graphs below consider the early years of the golden age, before the onset of the great inflation.

It was growing financial cost got the inflation ball rolling. Union demands took the hit for it later. But union demands did not create the initial problem. The rising cost of finance got inflation going, and kept it going until a wage-price spiral emerged.

For domestic corporate business, financial cost increased faster than the compensation of employees:

Graph #1: Interest Costs Increased Faster Than Compensation of Employees
Consider the 1955-1958 period, the years that concerned Samuelson and Solow. For every dollar corporations paid out as employee compensation in 1955, they paid out five cents for interest costs. By 1958 that number was seven cents. For every dollar of employee compensation they paid out, corporate business spent two cents more on interest in 1958 than in 1955. Financial costs gained on labor costs.

Financial costs also gained on profits:

Graph #2: Interest Costs Increased Faster Than Corporate Profits
For domestic corporate business, financial costs increased faster than profits. Between 1955 and 1958, corporate interest costs rose from 15 cents to 25 cents per dollar of corporate profits: a ten-cent increase in interest costs, ten cents for every dollar of profit.

For the whole period shown on the graphs, corporate interest costs rose from less than 10 cents to more than 30 cents per dollar of profit, and from less than 4 cents to more than 10 cents per dollar of employee compensation. It was finance, not wages or profits, that created the inflationary pressures.

Thursday, August 20, 2020

I don't think this is pointless, but I could be wrong

Found a folder named "New folder" on my desktop. It was empty, so I deleted it. The folder below it, "New folder (2)", also empty, also got deleted. Likewise for the one below that, "New Folder (3)".

The next desktop icon I came to was my "Toynbee, Asimov, and Civilization" folder. It contained this image file from an old Google search:

I saved that screenshot months ago because Spengler, Asimov, and Toynbee fascinate me. So now I looked up the Google Book. A search within, for "Asimov", didn't turn up anything that caught my eye. But in the Table of Contents, this entry did:

A search for ricardo duchesne, the fall of universal history turned up a two-page excerpt from chapter 7 of the Palgrave Advances book at Springer, and at Brill a largely similar two-page excerpt from chapter one of Ricardo Duchesne's The Fall of Western Civilization and the Rise of Multicultural World History. Note that the one refers to the fall of an approach to history, and the other to a fall of civilization. Both, however, refer to "the rise of multicultural world history".

That topic interests me, the rise of multicultural world history. But I know little about it (which is of course why I'm looking now). I do think it relates to current attitudes about the phrase "the Dark Ages". Current attitudes? Well, Britannica says the use of the words "dark age" implies a "pejorative" "value judgment" about "intellectual darkness and barbarity".

In our time, of course, intellectual darkness and barbarity are still not widely admired, so pejoratives are still applied, in our time and about our time. In our time, too, we have President Trump, an extraordinarily fine example of intellectual darkness and barbarity. And pejoratives are applied.

You could say that since the time of Reagan, maybe Goldwater, intellectual darkness and barbarity have been on the rise. Sure, but then you have to admit that it's a process, a process of change, change toward what in our time is best called a new "Dark Age".

That reminds me of this from the historian M. I. Rostovtzeff, on the fall of Rome:
What happened was a slow and gradual change, a shifting of values in the consciousness of men. What seemed to be all-important to a Greek of the classical or Hellenistic period, or to an educated Roman of the time of the Republic and of the Early Empire, was no longer regarded as vital by the majority of men who lived in the late Roman Empire and the Early Middle Ages. They had their own notion of what was important...
The thinking of Trump and his merry band differs from that of today's liberal. A shifting of values is in progress.

I'm talking about a way to understand the world, a way that could help resolve differences.


So anyway, Duchesne writes of the fall of "universal" history and the rise of "multicultural" world history. And as I said, I know little of all that. But I was interested enough to spend the morning in search mode. Wikipedia says Duchesne's
main research interests are Western civilization, the rise of the West, and multiculturalism.
That sounds like exactly the right combination of interests to answer the questions I wish I knew enough to ask. And then Wikipedia adds
Duchesne's views on immigration and multiculturalism have been described as racist and white nationalist...
And that caught me by surprise. I'd have thought the Euro-centric "universal" history would be the racist one, and the "multicultural" history would be free of all that baggage.

But Duchesne's thinking, at least according to Martin Hewson, is moving toward post-multicultural history. So, not multicultural thinking with its assumed natural freedom from the racist baggage.

Again, Wikipedia:
Duchesne also criticizes some conservatives for advancing the idea that Western political identity is based only on universal liberal democratic values that are true for all human beings. He argues that liberalism is uniquely Western and that Western identity is also deeply connected to the ethnic character of Europeans. More recently, Duchesne has argued that civic nationalism is consistent with a strong collective sense of ethnic national identity. The Enlightenment's cosmopolitan "promotion of peaceful relations among nations and opposition to the slave trade," he has written, should not be interpreted "as a call for a globalist, race-mixed order in the West." He has criticized Isaiah Berlin, among others, for promoting the idea that Johann Gottfried Herder was the original advocate of multiculturalism and racial diversity inside Western nations, arguing instead that Herder was a promoter of the value of distinctive nationalities in the world peacefully co-existing alongside each other in a multicultural world order.
The last part of that paragraph reminds me of Hayek in The Road to Serfdom:
Neither an omnipotent superstate nor a loose association of "free nations" but a community of nations of free men must be our goal.
And I think Duchesne on Herder is the only statement I've seen that expresses Hayek's idea better even than Hayek.


I find the Wikipedia article disappointing:
Duchesne has been accused by some of poor scholarship and of holding white nationalist or racist views. Historian R. Charles Weller has described Duchesne's anti-immigration stance as bearing "an uncanny resemblance to white nationalist and racist anti-immigration laws of the interwar period aimed at maintaining a white majority".
Maybe. I dunno. But I know that this excerpt is not about Duchesne and his ideas. It is about other people and their criticism of his ideas. Or rather, their interpretation (or misinterpretation) of his ideas, and criticism thereof.

If you tell me what Duchesne said, I can begin to form my own evaluation of it. If you tell me that what Duchesne said was racist, then all I know is what you think of it.

Me? I tell you what I know
  • Spengler, Asimov, and Toynbee fascinate me.
  • The "rise of multicultural world history" interests me.
even if I don't know much about the topic.

Tuesday, August 18, 2020

"... there is no official national tally of school-linked COVID-19 cases, and some states are not reporting how many outbreaks have occurred or how many students and staff members have been infected."

NBC News (17 August), Coronavirus is spreading in schools, but the federal government isn't keeping count:
Coronavirus cases are already surfacing in K-12 schools that have reopened, but the federal government is not tracking these outbreaks, and some states are not publicly reporting them, making it more difficult to determine how the virus is spreading, experts say.
“Without good data that tracks cases over time — and shows how one case turns into many cases — there's just no way to answer that question,” said Emily Oster, an economist at Brown University and co-founder of COVID Explained, a team of researchers studying the pandemic. “In January, we'll be in the same position that we are in now, and kids still won't be in school.”

Monday, August 17, 2020

Goldstone (the movie) by Ivan Sen

Except on bad days, I don't accept the notion that you can't change the world. But the statement quoted below is a powerful one and I wanted to capture it for the blog.

From Goldstone, on Netflix, starting around 55:30, the old whore talking to the young one:
The world is what it is.
You cannot bargain with it.
You cannot change it.
To find a place to fit within it.
This is your destiny.
Anything else is to ask for trouble.
Anything else is to ask for too much.
The world was not made for you.
You were made for it.

Friday, August 14, 2020

I have to stop reading the Google News

For background on the financial difficulties of the Postal Service, see this Youtube video from John Oliver's Last Week Tonight of 10 May 2020:

In particular, starting about 6 minutes in, the part about the Postal Accountability and Enhancement Act of 2006.

Sunday, August 9, 2020

Adam Smith on the rise of order

Quotes from Book 3, Chapter 4 of The Wealth of Nations

It was the rise of commerce that brought order, Smith says:
... commerce and manufactures gradually introduced order and good government, and with them, the liberty and security of individuals, among the inhabitants of the country, who had before lived almost in a continual state of war with their neighbours and of servile dependency upon their superiors. This, though it has been the least observed, is by far the most important of all their effects. Mr. Hume is the only writer who, so far as I know, has hitherto taken notice of it.
Not the feudal law:
The introduction of the feudal law, so far from extending, may be regarded as an attempt to moderate the authority of the great allodial lords... But though this institution necessarily tended to strengthen the authority of the king, and to weaken that of the great proprietors, it could not do either sufficiently for establishing order and good government among the inhabitants of the country, because it could not alter sufficiently that state of property and manners from which the disorders arose. The authority of government still continued to be, as before, too weak in the head and too strong in the inferior members, and the excessive strength of the inferior members was the cause of the weakness of the head. After the institution of feudal subordination, the king was as incapable of restraining the violence of the great lords as before. They still continued to make war according to their own discretion, almost continually upon one another, and very frequently upon the king; and the open country still continued to be a scene of violence, rapine, and disorder.
It was not feudal law, according to Adam Smith, but the growth of "commerce and manufactures", that brought order to the feudal era.

Saturday, August 8, 2020

Adam Smith on patriotism

A merchant, it has been said very properly, is not necessarily the citizen of any particular country.
The Wealth of Nations, Book 3, Chapter 4

Friday, August 7, 2020

Adam Smith on rising wages

It is not the actual greatness of national wealth, but its continual increase, which occasions a rise in the wages of labour.
The Wealth of Nations, Book 1, Chapter 8, [22]

Monday, August 3, 2020

The Shutdown began with the NBA

According to the Timeline of Coronavirus' Impact on Sports, on 11 March 2020, the NBA suspended the 2019-20 season "until further notice."

The NBA opened the floodgates. The next day, the timeline shows, there were suspensions or cancellations by the International Tennis Federation, Major League Soccer, the Big Ten, U.S. Soccer, the NHL, the NFL, MLB, Minor League Baseball, the NCAA, Formula 1, and the PGA Tour, among others.

I have a question: The Trump Administration played no part in this?

Wikipedia offers a Timeline of the COVID-19 pandemic in the United States. Here is a sampler for January:
On December 31, 2019, the U.S. Centers for Disease Control and Prevention (CDC) became aware of cases in China and began developing reports for the Department of Health and Human Services (HHS) on January 1.

On January 3, CDC Director Robert Redfield was notified by a counterpart in China that a "mysterious respiratory illness was spreading in Wuhan [China]"; he notified HHS Secretary Alex Azar, who shared the report with the National Security Council (NSC). According to The Washington Post, warnings about the virus were included in the President's Daily Brief in early January, an indicator of the emphasis placed on the virus by the intelligence community.

On January 8, the CDC issued its first public alert about the coronavirus.

On January 9, the WHO issued a statement naming the disease as a new coronavirus in Wuhan.

On January 10, the WHO issued a comprehensive package of guidance to countries on how to test for potential cases. By this date, the WHO warned of the risk of human-to-human transmission.

On January 14, the WHO held a press briefing stating that their information suggested a possibility of limited, but not sustained, human-to-human transmission...

On January 18, HHS Secretary Azar discussed the coronavirus outbreak with President Donald Trump, who criticized Azar for being "alarmist".

On January 20, both the WHO and Chinese authorities announced the confirmation that human-to-human transmission of the coronavirus had already occurred.

On January 20, Chinese Communist Party general secretary Xi Jinping and State Council premier Li Keqiang issued the first public warning about the coronavirus to Chinese citizens.

On January 22, Trump received his first public question from a reporter regarding whether he was concerned about the coronavirus. Trump responded: "No, not at all. And we have it totally under control. It's one person coming in from China ... It's going to be just fine."

On January 23, the World Health Organization (WHO) published a statement on the coronavirus, indicating that: "Human-to-human transmission is occurring and a preliminary R0 estimate of 1.4–2.5 was presented..."

On January 27, the WHO assessed the risk of the coronavirus to be "high at the global level".

On January 29, the U.S. government evacuated 195 State Department employees from Wuhan...

The New York Times reported that President Trump was told "at the time" of a January 29 memo by trade adviser Peter Navarro that the coronavirus could cause as many as half a million deaths and trillions in economic damage. Further, on January 30, HHS Secretary Azar warned President Trump about the "possibility of a pandemic".

On January 29, WHO Health Emergencies program leader Dr. Mike Ryan said in a press briefing: "The whole world needs to be on alert now ... and be ready for any cases that come from the epicenter ..." At the time, 68 cases had been confirmed outside China, affecting persons in 15 countries.

On January 30, the WHO named the coronavirus outbreak that originated in Wuhan, China, a Public Health Emergency of International Concern, warning that "all countries should be prepared for containment, including active surveillance, early detection, isolation and case management, contact tracing and prevention of onward spread"... The WHO also released a statement that included: "The Committee believes that it is still possible to interrupt virus spread, provided that countries put in place strong measures to detect disease early, isolate and treat cases, trace contacts, and promote social distancing measures commensurate with the risk." However, the federal government and individual states did not direct their populations to practice social distancing (e.g., stay at home except for essential travel) until March 19. Further, as late as April 8, five states had no social distancing rules and three others had rules for only parts of the state.

On January 31, the Trump Administration, through the U.S. Department of Health and Human Services, declared a public health emergency, and imposed a mandatory 14-day quarantine for any U.S. citizens who has visited Hubei Province in China within the preceding two weeks. It also began denying entry of non-U.S. nationals who had traveled to China within the preceding two weeks. This was the first such travel restriction by the U.S. in more than 50 years.

President Trump repeatedly claimed credit for acting early with the travel ban. However, The Washington Post reported that 300,000 people traveled to the U.S. from China during the month prior to the ban. The New York Times reported that more than 40,000 persons traveled from China to the U.S. after the January 31 partial ban, and around 430,000 total between the December 31 disclosure of the outbreak by China and April 4. The Washington Post reported that six other countries had restricted travel from China before January 30, six did so on January 31, and by the time U.S. travel restrictions became effective on February 2, 38 other countries had taken action before or at the same time as the U.S. restrictions. The earliest action was Singapore on January 23. Flights from Europe were not banned until March 11, with hundreds of thousands crossing the Atlantic into the U.S., due to disputes about the impact on the U.S. economy among Trump Administration officials.

  • On 11 March 2020, the NBA suspended the 2019-20 season.
  • However, the federal government and individual states did not direct their populations to practice social distancing (e.g., stay at home except for essential travel) until March 19.

I guess that answers my question.

Sunday, August 2, 2020

Donald Trump

From Trump asks: ‘Why don’t I have a high approval’ on the coronavirus when Fauci does? at CNBC:
“We could have gotten other people, we could have gotten somebody else, it didn’t have to be Dr. Fauci,” Trump said at the presser on Tuesday evening. “He’s working with our administration, and for the most part, we’ve done pretty much what he and others, Dr. [Deborah] Birx and others, who are terrific, recommended.”

“It sort of is curious. A man works for us, with us, very closely, Dr. Fauci and Dr. Birx, also highly thought of, and yet they’re highly thought of but nobody likes me,” Trump said.

Saturday, August 1, 2020

Anthony Fauci

From an interview with Anthony Fauci at Wired:
Do you think the president understands how science works?

Yeah, I believe so. I believe so.

But what goes through your mind when you hear the argument he makes that the high numbers of infections are a result of testing?

It’s not going to be helpful or productive for what I need to do in my role as a public health official, and a scientist and a physician, to try and get our arms around this outbreak and to do the kinds of things and the kind of work that we do, if I start going one-on-one and contradicting what the president said...