Economics

Thoughts on COVID-19

I’ve been a part of enough things in my life that eventually became news stories to see a pattern. Whatever is reported is either an exaggeration, a partial truth or an outright misrepresentation of what actually took place.

Rarely is a dispassionate account of the truth rendered.

As a result, I’m skeptical of many things I read. I understand the forces that are at work in the media. The money, the ratings and the ultimate goal of eyeballs and clicks get in the way of the effective distribution of important information. It’s not a conspiracy. It’s a misalignment of incentives. The result is that we should remain healthy skeptics when consuming information.

For many, the appeal of President Trump has been his willingness to challenge what experts, the media or anyone, frankly, is saying. The uncomfortable truth for many of us is that so much of what circulates in our modern information stream is not entirely true or skewed by spin. And so if one decides to “call bullshit” on everything, one has a very good chance at being right quite often.

President Trump has made it a standing policy to call bullshit on everything that doesn’t come from him or that doesn’t align with administration policy. Based on the patterns I just described, he’s often right.

The risk has never been accuracy with this approach. The risk is a loss of confidence in the institutions we need to take action when something eventually isn’t bullshit.

The global COVID19 outbreak is not bullshit. It is real. And it is shutting the world down in front of our eyes. The claims that this is just the flu are not real. Even it it were, doubling a flu outbreak and increasing the mortality rate would still overwhelm our current care infrastructure. Pointing out that it’s just the old and sick that will die isn’t helpful either. We will not simply sit back and let everyone of us who isn’t completely young and healthy die. Along the way, we will shut down daily life and the modern global economy to avoid that end.

Does anyone honestly believe that China is prone to overreact to save some lives? The state that brought you a famine that starved millions to death and a Cultural Revolution that exterminated an entire class of intellectuals shut down the country to keep the virus from spreading. We should take notice. This is not a drill.

There is good news though. Because for once, we actually have some control over our fates.

In a world where we seem powerless against the march of never-ending wars, environmental catastrophe and the erosion of social cohesion, this pandemic gives us an opportunity. This virus needs us to live. We have domain over its host.

For once, we are in control. And we can be heroes.

There are things that spread viruses faster. We know what they are. We have already stopped doing many of them. There are things that impede progress of spread. We should do them. Limiting public gatherings, taking sick days, social distancing, self-quarantining and washing hands are all things that slow the spread of the virus.

Those are the things we can do as individuals. But there’s more. This is an opportunity to address some things.

It’s probably time to have legislation that ensures that the people who serve our food get paid sick leave. Think about that. The people handing you your food all feel like they have to work through being sick. Coronavirus or not, I’d rather that end. Trader Joe’s changed their policy on this immediately. Heroes.

It’s probably time to figure out how more roles can work remote. It’s probably time to figure out how employers handle parents that have to stay home to care for kids whose schools are closed. It’s probably time to identify a national response plan for any epidemic. What buildings get used for overflow. What labs can be used for emergency testing. What funding can be immediately released.

I thought this was all already in place. It’s not.

Today the New York Times reported that we had testing capacity in Seattle weeks ago. The lab there wasn’t allowed to test because of a standing CDC policy. Two dozen people in Washington state are dead. It’s easy to Monday morning quarterback and lay blame. But it’s also easy to stand up and say that for the next six months, all policies prohibiting testing are waved.

One great question this pandemic may bring us closer to answering is this:

How do we pandemic proof our globally integrated economy?

The real risk that we have is that we can’t save lives right now without tanking the economy. What would need to be true in order for that not to be the case?

The United States of America has been at war nearly my entire adult life. Aside from the days and weeks after 9/11, nothing the war has had to offer has impacted Americans the way the COVID-19 outbreak already has. Understanding the risk and what to do going forward should be a national policy issue second to nothing.

The goal is simple. Short Term: Take positive action to slow the spread of the virus to a rate that allows our medical response to keep pace with it. If we don’t, medical facilities will get overwhelmed, people won’t get treatment and our ability to respond to other everyday medical issues will be limited. Longer Term: Drive institutional change that makes us more resilient to future outbreaks.

I’ve worked in risk my entire professional life. The regrets I have from taking actions against things that didn’t materialized into catastrophe are zero. The regrets I have from not taking action when it could have mattered are substantial. Moreover, I have no idea what catastrophes were avoided by small actions early on in the problem. I’ll never know. And I don’t regret that either.

In the world of the material, beyond politics and media swirl, when we work to solve these sorts of existential issues, no one claims we’re overreacting. The word panic doesn’t even wander into the room. Instead, the tone is one of a requirement to be stewards of the resources we’ve been trusted with to carry out the responsibilities we have to those that count on us.

No one calls bullshit. Because it’s not bullshit.

We have a window here. But it’s going to close. If it does, the outcomes won’t be disaster movie extinction. It will be thousands of lives lost, the loss of effectiveness of our current medical care infrastructure and eventually the catastrophic shut down of the domestic and global economy.

That’s one potential outcome. The other is a coordinated and committed effort to doing what we can, while we can to avoid it. So, before you hit share on the witty, people all need to calm down meme, ask yourself this.

What’s the cost of being wrong about that?

The math on this one is clear. And we’re on the clock. This is our chance to be heroes.

Book Review: Tyler Cowen’s Big Business, A Love Letter to an American Anti-Hero

If it seems like I just wrote a review of a new Tyler Cowen book, that’s because I just did. He’s since written another though. With six months between releases, the Tyler Cowen production function is clearly in full effect.

His latest, Big Business: A Love Letter to an American Anti-Hero is well described by the title. It’s a book that few besides Tyler Cowen might have dared to write. It’s difficult to get laughed out of the room for naivety when much of your brand is knowing more things about more things than anyone. For most everyone else, I suspect it would be received differently. The response I got from tweeting a few of the lines from the book without attributing them to Cowen was a combination of eye rolls and followers mistaking it for satire.

It’s not satire though. Tyler Cowen is quite serious. And he’s insistent on using his eclectic super powers to fill a needed void in today’s intellectual rubric; a credible source of permission for calculated optimism.

Cowen’s last book, Stubborn Attachments told us, among other things, not to be afraid to seek hard truths because we could be trusted to do the right things even if we found those truths difficult to swallow. His newest book tells us that one of those hard truths might be that big business is good for mankind. And we shouldn’t fear a world where we trust in it to play an oversized role compared to other alternatives.

That something reasonably obvious should be a hard truth is some part of Cowen’s point.

The general thesis of the book is that, at the margin, big business is a better influence on society than the alternatives. Government, politics, small businesses and even plain old private citizens all have institutional flaws or introduce risk through the power of obscurity or anonymity. Large corporation, on the other hand, have some mandate to sustain their existence and branding with many public eyes on them. Coupled with the motivation of sustainable profit, this makes them inherently trustworthy. At least relatively so.

The theory is one I can put to the test pretty easily with the natural experiment that’s my own professional experience. I’ve worked in multiple industries, presently in the Silicon Valley based tech sector, and also served 15 years on active duty in the military. I’ve spent enough time on both sides of the private and public sector to advance to roles that granted some level of insider experience. That experience has run the tracks for some telling mental thought patterns.

My gut reaction to the recent reports of war crimes in the community and even more specifically within the command in which I served, was disgust. But it wasn’t surprise. In fact, I’m surprised it hasn’t happened or been reported on more over the last 20 years. That is hasn’t is a credit to the individuals that serve and the unique decisions they make to ensure it doesn’t. Because in reality the institutional characteristics of the military make it an inherently risky organization. It has hard laws on the books that purposely subvert transparency, official positions of discrimination on multiple fronts and tolerates high levels of civilian casualties and even poorly thought out wars that destabilize regions.

In contrast, my gut reaction to the Volkswagen emissions scandal was shock. I know why they did it. I have no idea how.  I certainly don’t think higher of the people at Volkswagen than I do of my brothers and sister in arms. But I do know what it takes to make corporate decisions and execute corporate policy. And it’s really, really, really hard to convince leaders to do anything intentionally corrupt at scale. If for no other reason than it’s impossible to keep one of the dozens to hundreds of people it takes to do it from going public.

No one got a review they didn’t agree with from a manager they didn’t like and just put it out there on Facebook…? Really?

I get to stand and be honored in the bottom of the second inning of every baseball game I go to because I served in the military. The idea of calling in the corporate stiffs for the same level of appreciation would be laughable.

That perhaps the appreciation gap should be narrower than anyone wants to admit is part part of the point of the book.

Few disagree that big business does good by producing the things modern society needs to exist and employing and providing benefits for large swaths of the world. The catch is that we believe corporations can’t be trusted to treat employees, the environment, customers or the general public well if its runs counter to their primary motivation of profit.

Simply adding profit as a motivation enables the public to appreciate and trust corporations less than they do the military, an institution constructed to do things explicitly that ought to make us trust them less. Why is probably a topic for another book. Maybe Tyler can take it on over the first three-day weekend this fall.

This book, like Cowen’s last, is a quick read. It runs through counter arguments like CEO pay, the modern working environment, evil tech companies and the financial crisis. Some of the data points feel overfit to the argument. Part of that is probably the commitment to making it a quick read. More intentionally though, I suspect, part of Cowen’s point is that the media narrative is also overfit. It takes advantage of rare one-offs to weave a tight analysis of profit seeking horribleness. An so the data, even if narrowly selected, is at least as believable as the narrative. And so, at a minimum, perhaps the tiebreaker can be the ubiquitous good that comes from the production of everything and the employment of everyone.

My best argument against Cowen’s point is that profit seeking as a rule of law is something more fragile than the inherent rights of man that other organizations claim as a first principle. And so slippery slopes abound. I’ve watched groups slide right down them and nearly take me with them. But they’re far less dubious than most imagine when skimming the sensational headlines. And they’re rarely, if ever, repeated. It’s hard to shake the image of Alan Greenspan in front of Congress in 2009 telling us that the trust he had in free markets was more limited than he had thought though. And so there’s some fear that one day we’ll wake up and have been duped again.

That still seems considerably lower a chance than the guy who painted my house that insisted that I pay him cash because he didn’t want to pay taxes that go towards funding the schools my kids go to or the first responders in our neighborhood. We all have some version of that story of our own. While the stories of corporate malfeasance tend to be things that happened to someone else less real.

Such is Cowen’s point.

The Future of Capitalism

Humans and other great apes share a common ancestor.

Somewhere between four and 13 million years ago, a spread we could fit a few thousand western civilizations in, our species branched out from the other modern great apes and became human.

Our genome is still 24/25ths the same. And so we spend a lot of time studying the other great apes to try to parse out that last 25th. The thought is that finding the behavioral delta is proof of what makes us human.

It turns out, we have a pretty good idea what it is.

It’s the shared understanding required for high levels of cooperation. Comparative Psychologist Michael Tomasello’s book Becoming Human: A Theory of Ontogeny explains the theory well.

Though it looks like apes and chimpanzees and bonobos and orangutans cooperate at a high level, they don’t. They use each other as tools to maximize individual benefit. If an activity takes two chimps, one views the other one the way we view a hammer. When they go on a group hunt, each participant goes to the space that they believe will yield the most likely outcome that they will make the kill and get the largest share of meat. If the best spot is taken, they understand that sharing the spot is worse than moving to the next best spot and occupying it by themselves.

The apes never really get that doing something for the greater good of the group, in and of itself, is a worthy endeavor. Because they aren’t capable of seeing the world through another’s eyes. This is something only humans do, as best as we can tell. It’s an ability we develop between two and three years old. Children with autism do it later or not at all. The inability to do it causes a tremendous disability.

Animals have equal or greater instinctual intelligence than humans. They have greater or equal spacial and physical intelligence. And machines can store many more times the data and make much better decisions than we can. It’s reason that makes us human. And there is no reason without the full world view that comes from shared understanding. Empathy and shared understanding are what makes us functionally human.

The ability to organize beyond our own needs and grow relationships and groups beyond our horizons is what has allowed us to dominate our environment. And so the notion that man’s natural state of being is one of boundless liberty and competition is not real. Nor is the notion that our best outcomes are achieved by the same means.

Unregulated competition is the domain of animals.

We humans require something else.

The running debate of what we do with our resources, as a society, is as old as tribes. And the notion of unequal distribution of those resources is as old as our ability to produce resources that allow us to live above subsistence. The ebb and flow of the value of capital and the value of labor isn’t something produced by the discovery of Adam Smith’s invisible hand.

Economic historian Walter Schiedel’s The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century paints a picture of a constant pattern, from the ancient Sumerians to the Chin Dynasty to modern day America and all stops in between, of long periods of peace and stability leading to increased economic inequality. Scheidel believes, and makes a strong case, that the only things that have ever curbed the progress of inequality are pretty dreary events; the four horseman of leveling: mass-mobilization warfare, transformative revolutions, state collapse, and catastrophic plagues. And so we should take a measured approach to stating that economic inequality is the great evil of our time. As it’s solutions tend to be far worse.

The last 50 years in America has seen the distance between the richest and the poorest among us grow. It has seen the concentration of wealth grow too. Consequently, a debate about the fate of the capitalism is upon us. And if Scheidel is correct, it’s important we have the right one, lest we rely on one of his four horseman to relieve us of our burdens.

There are some important things to get right if we’re going to have that debate though.

First, capitalism didn’t create economic inequality. Economic inequality comes from excess resources above subsistence. And it exists, and has existed, in every form of government and financial system.

Chen Liangyu, a communist party elite in China amassed a fortune of billions that would have put him near the top of Forbes list of the world’s richest by using the state positions he had to defraud state institutions. He did it for decades until reforms led to his arrest. Monarchies used titles and land rights. Empires used mercantilism. The church used religion.

Whatever avenue allowed for the amassing of wealth, we’ve found a way to manipulate it. Capitalism, more specifically the mechanisms and innovations that have enabled protection of property rights and the ability to pool resources for investment, has simply been the most efficient engine of abundance. And so blaming capitalism for inequality is a trope; presently a popular political one.

If we want to eliminate abundance, we should take aim at capitalism. If we aim to limit economic inequality, that’s another matter. One that will take some a-political thinking.

Contrary to popular opinion, the governing documents of America don’t call for any specific economic system. Nor would the Founders have been able to imagine the specifics of an economy that has traveled several innovations beyond the agricultural one that existed in their time. Instead, they set an original position from which citizens (narrowly defined at first) could benefit from the mutual advantages gained within a state that ensures access to life, liberty and pursuit of happiness. And they gave us the power through representative government to hold that state accountable to ensure it.

What’s evolved over the last quarter of a millennia has been a uniquely American story that mixed free markets, centrally managed banking functions, control over foreign trade, socialist investment and a nearly endless list of other characteristics that has made up the unique American economy.

Saying it needs to be left alone in the name of liberty is to misunderstand, fundamentally, what it is. Saying it is broken and that we ought to be more like Denmark to fix it is more of the same. It’s a bit like telling an Olympic weightlifter that to win more gold medals they should swim faster. Fast swimmers after all, win the most gold medals.

To get to Denmark, one need start in Denmark, an ethnically homogenous country with a population one third the size of the Los Angeles metropolitan area.

One question to ask ourselves is whether or not we think that the gap in resources between our most wealthy and our least is actually the problem. Materially, does it matter to someone in the lowest quartile how much someone in the highest quartile has? Is it something that’s particularly observable in daily life? What matters is how hard it is to be poor. And how difficult being poor makes it to not be poor. So, perhaps better questions are, how can we make the quality of life for the poorest among us better? And how can we make it easier for them not to be poor from one generation to the next?

There are some very obvious answers.

To the former: Daycare. Healthcare. Affordable housing.

To the latter: More high paying non-professional jobs.

Deciding to dive headlong into a tastes great/less filling screaming match about capitalism and socialism is where some part of our current political debate lies. A better way might be to try to start to discuss, in earnest, what to do with our excess societal resources. And to have that discussion from the position that accounts for the reality that, like trees, inequality doesn’t grow to the sky. Eventually something redistributes it.

It would be beneficial to pro-actively figure out how on our terms.

We are not apes whose best outcomes come from dominating each other. And our founding charter as an American people provides no limits on most questions of how we cooperate. It only demands that we do, within the constructs of a basic rule of law. And so perhaps it’s time we did again.

There are some ground rules though. Pointing to EU socialism as a panacea is dangerous. For one, it does not hold up well to the forces of immigration. And it does not provide for the economic dynamism Americans have relied on to move our future forward or to keep pace with the Chinese economic miracle. But it does clear out some space somewhere between them and us to ask a few good questions.

Here are mine:

What innovations do we need in our markets and tax code to account for an economy where 80% of corporate valuations are from intangible assets (assets that lack physical substance)?  Not long ago, that number was 20%. .

What problems would building affordable housing on a mass scale solve?

Same question for infrastructure.

Why don’t we have enough science jobs? (Hint: It’s because we don’t fund enough research…not because we don’t have enough scientists.)

Could a single payer healthcare system for the $3.7T healthcare market create an industrial complex similar to that of the one created by the $700B DOD budget?

Would that be bad or good?

Does an education system where a college education is the goal produce anything other than education spend and college graduates?

What would happen if we built a city of two million population capacity 100 miles west of Austin? Or ten of them in ten places just like it.

How come there’s not more nuclear power?

What other questions should we ask?

These are a good start. And though the answers are important, the point isn’t just the answers. The point is to shift the debate to what to do with our existing resources. And to stop the debate on who is worthy of resources.

And start behaving like humans again.

The Odd Institution

There’s a conversation I once had with the director of admissions at a top west coast business school that I’ve kept tucked away in the back of my mind for the past 15 years or so. Yesterday’s college admissions fraud scandal  that was plastered all over my social media feed brought it back to the front of my mind.

I had recently returned from my second deployment in support of Operation Enduring Freedom and I was smack in the throes of my first military separation after six years as an officer. I had a plan. That plan was to go to a top business school, transition into work in the private sector and start a life and a family.

It was a good plan.

I didn’t get into my top choice school though. And that led to the conversation. When I contacted the director of admissions for feedback on why, he told me plainly that my undergraduate GPA at Annapolis was too low.

I asked him if he had a frame of reference for how overall GPAs at service academies, notorious at the time for not participating in grade inflation, stacked up with other groups. He said he didn’t know. And that it was something that they didn’t consider. He said there was a waiver system for low GPAs. But he told me that they had run out for the year. And that he didn’t know what the cut line for how many waivers was based on. Or how they chose priority for who got the waivers. Or to what other standards, besides GPA, the waivers would be considered against.

My take away from that conversation wasn’t that I had been unjustly wronged by an institution and denied something that I deserved. Instead, I concluded that it was clear that the process was pretty loose. At least relative to how much it mattered to my personal outcomes that I went to a top business school.

In the end I ended up going to another good, but not “as good”, business school. One nice enough to hold my spot when I got recalled and sent back to Iraq after my first semester. I had no problem with the academics as everyone got A’s and B’s pretty much no matter what. And then I transitioned out for good into the tech sector in Silicon Valley where I am a decade later.

My experience affirmed my original suspicions. A whole lot of this doesn’t really make much sense. This being the role higher education and things like admissions processes and standards play in our society.

If an alien came down to earth, or even someone from Denmark really, and tried to figure out what’s going on in American higher education, they’d have some questions.

Why does it matter if I can swim fast?

Why do text books cost more than tablets that could hold a thousand text books worth of data…or access all the text books via the magic of internet?

What’s tenure?

Why does it cost so much? And why is that cost rising faster than other things?

What role do Nick Saban and Dabo Swinney, our two highest paid state educators, play?

Can you use a government loan to pay for tuition at a government school? If so, how come the government loans you money for you to pay back to another government, which is partially funded by the same government, to give you something that you can then pay interest back to the government.

What does one do with an endowment larger than 37 state budgets?

What’s the Fiesta Bowl?

They’d fumble around with these novelties and then eventually get to the big one. What’s the purpose of higher education in America?

The quick answer is to provide America with an educated society, so that we may be a more capable one. Economist Bryan Caplan offers a compelling argument in his book, The Case Against Education. Caplan takes a data backed approach to addressing the question. Is it all about human capital, as the answer I provided above would lead you to believe?  Or is it about signaling a mixture of intelligence, commitment and the ability to follow the rules to future employers.

Caplan believes it’s mostly the latter; much more than anyone cares to admit. And in a society in which that’s true, educating one’s self is the right thing to do in order to benefit one’s own potential outcomes. As a society as a whole though, the entire activity yields limited positive impact that couldn’t be duplicated with a much less ridiculous and far less resource intensive vetting process.

Even if one believes that Caplan has overstated his case, it’s fair to ask, in a world of skyrocketing education costs and overwhelming student loan debt, is the juice really worth the squeeze?

My experience in education is that it’s far more signaling than human capital. My Naval Academy ring has earned me more money than my ability to work our differential equations. I need little science to prove this as I’ve done zero differential equations in my work life and spent the majority of some period of my life learning how to do them in school.

Which brings me back to yesterday’s news about the college admission scandal. It’s everything we want in a story. It’s people of privilege with no-good kids that they can’t get to do anything, doing unbelievable, reprehensible and illegal things to get those kids into school. We can’t get enough of the moralizing and finger wagging at the things that we love to hate. Restrictive elite organizations. And people of privilege. And no-good kids.

As I read through the list of bad deeds and unbelievable behavior, I couldn’t help but wonder about that 15 year old conversation. And just how odd the things that we care about are. And that when pressed, people that ought to know why we care, can’t really say why we care.

Sailing teams. Special considerations for standardized tests. Community service. Money.

I value the place academia has in our culture highly. There needs to be a place where knowledge and learning and science are the objective. Not the means to an end. But I can easily separate that purpose from the industrial complex that is higher ed today fairly easily. And I can see the great burdens and barriers to opportunity the institution is contributing to society. And I can’t help but wondering how many better ways are there to do what we’re doing.

This is the Review I Want to Write About Tyler Cowen’s Stubborn Attachments…

A few months back, my roommate from Annapolis sent me a text that marked a distinct waypoint on the arc of our relationship over the last 25 years.

He’s a combat decorated, navy jet pilot, who, for my wedding gave me a framed map annotated with all the places in America in which we’d had a beer.

There were quite a few dots on it.

Between the two of us, there are a half-dozen war time deployments and countless carrier landings and special operations missions. We’ve lived all over the world and seen, first hand, many things people write books and make movies about. And now he was bragging to me via text about something he knew would impress me to the extent of appreciative envy.

It was a picture of him with an economist.

Clearly things for the two of us are not what they once were.

The military life, especially during a time of conflict, allows one to experience things at an accelerated pace. By the time I was 32, I’d been on every inhabited continent, lived off the economy in Africa and fought wars in two countries. Many of the things discussed in intellectual circles–failed economies, authoritarian regimes, intersectional class systems– I experienced in utility, without the veil of narrative.

As things slow down and we get around to constructing those narratives in arrears, the nasty business of figuring out what it all meant, we often find that we’ve got a bit of catching up to do relative to those who dove right into academic or policy life. Ours was the kinetic world. The world of atoms, force and energy. If we are to get to work on the abstract, the world of words, bits and neurons, it’s good to find some thinkers to fast follow.

Economist Tyler Cowen is a good place as any to start. That’s what my roommate texted me; a smiling picture of him with the George Mason economist at a speaking engagement.

Cowen, the Holbert C. Harris chair of the economics department at GMU, co-hosts the blog Marginal Revolution with fellow GMU economist Alex Tabarak. He also hosts the interview podcast Conversations With Tyler.

I  started following him after I found an old Ted Talk of his telling me to be suspicious of simple stories. In it, Cowen warned that we have a propensity for narratives. They feed our biases and often obscure useful truths.

The thought squared with my experience chasing terrorists abroad. If one of my analysts started his target package brief with a story of who the target was and why they mattered instead of where they were and what they were doing, I cut them off.

Or so the narrative of my time doing that work tells me at least.

True to the message, some part of Cowen’s appeal is how easily he wanders out of the picture of his own narrative.

The blog, Marginal Revolution, is the best source I’ve found for eclectic societal, cultural and economic discussion that’s easy to consume, understand and use as a springboard for deeper learning. It’s a daily read for me.

The ideas on the site are usually not Cowen’s. A one-line commentary or a stand-alone post that highlights higher thinking on a topic here and there are all one gets from Cowen himself. It’s mostly a distribution hub for the better thoughts and thinkers of our time on a broad scope topics. The Podcast is a long form interview format of the same spirit.

Cowen’s value to the intellectual domain is less of the great man or transcendent thinker and more of an exceptional machine learning algorithm. The effectiveness of any ML algorithm is mostly dependent on two things: the accuracy of the base algorithm itself and the speed at which good data can be fed through it for it to improve.

Cowen’s capacity to consume and process information approaches the savant. And though impressive, simply knowing and understanding things isn’t the value he adds to the discussion. What’s of value is the perspective spit out on the other side of the Tyler Cowen productivity function. Which means there’s something to the base code itself.

Cowen’s specialization is that of a generalist, insistently so. Poured on top of that broad focus is an insistence on travel and cultural experience. All politics are local and personal. And how we see the world is deeply influenced by how we’ve seen the world. These more human undertones set Cowen apart from other economists like GMU collegues Robin Hanson and Bryan Caplan, whose work, while important and deeply interesting, feel to be somewhat motivated by a need to bludgeon us with chants of “logos over pathos”.

Cowen’s work has more blood in it.

More human than Hanson and Caplan is still not that human though. There’s a disciplined calculus to Cowen, so much so that there’s a predictability to his positions. The machinations of that calculus, the ML function itself if you will, are on display in Cowen’s latest book, Stubborn Attachments: A Vision for a Society of Free, Prosperous, and Responsible Individuals

Stubborn Attachments isn’t Cowen’s most readable book. But it might be his most important. It’s short, (160 pages) to the point and more technical than some of his more recent efforts. A good companion to help some of the less economically literate would be to listen to the two hour interview  of Cowen about the book by Rob Wiblin, to conversationally fill in some of the blanks.

At it’s core though, Attachments is a sort of permission giving message, to the usefully pessimistic, to think about the future, value it appropriately and do the right things. And to all agree that there are certain things we simply should not do that don’t require an epistemological burden to show we ought not do them.

The Straussian interpretation, the one Cowen doesn’t actually write and therefore is heavily informed by my own interpretation and biases, is a message to a world growing increasingly incapable of exploring hard truths because of political correct backlash, that says, don’t fear, explore the hard questions, seek truth. We have limits to what we’ll trust to our utilitarian motivations. And we can still be trusted to do the right things, protect the right people, avoid the great evils of the world and make a difference.

But we won’t if we stop insisting on honest answers to the right questions.

Stubborn Attachments is full of  Cowen’s version of the right questions. And some of the right answers.

The answers:

We’re capable of making rational judgements about what is better for society.

There is an idea of what is objectively good. And it’s based on the idea of supporting sustainable economic growth.

The valuation of the future is central to the theme of the book. How should we think about the future? Is it something less valuable simply because it’s far away? If not, how does that notion materially impact our decision process?

What’s the right way to approach the answer to three critically important questions for a prosperous human future:

1-What can we do to boost the rate of economic growth?

2-What can we do to make civilization more stable?

3-How should we deal with environmental problems?

In 160 pages, Cowen does little more than seed the answers to the big questions with insights and some nudging on how to think objectively about these sorts of questions. This is, after all, the book about how to take small steps towards a better future that Tyler Cowen wants to write…not the one I want him to write.

It’s possible the one with the answers is the one you’ll have to write yourself, in whatever medium you find the ability to serve the future of mankind. Which is, I imagine, the point.

Something New

Two things happened yesterday. More than two really, but two relative to the scope of this thousand-word blog.

The first, was that for about the five hundredth Tuesday in a row, I failed to spend any time learning Spanish as I had committed to doing 10 years ago when I said I wanted to speak three languages before I turned 40.

I presently speak one. And that’s being generous.  Continue reading →

The Great Decoupling

In 1880, George Eastman developed a machine that could coat the dry photographic plates used in the sliver gelatin process. In plain English, that means he made it easier to make the things that made pictures. Eight years later, he founded the Eastman Kodak Company in Rochester, NY. Eastman Kodak sold cameras pre-loaded with film for the modern day equivalent of $600.  Continue reading →

The Inevitability of the Machine

As long as we’ve been making computers, we’ve been trying to make them beat us at chess. That sounds like an odd thing to do with a computer out of all possible things that can or could be done with one. Until you spend a little time figuring out how one makes a computer that can beat a human at chess.

And then you get it. And then you’re scared to death.  Continue reading →

The Hard Problem

Within the first few pages of the second to last chapter of the important book Whiplash: How to Survive Our Faster Future  by MIT Media Lab director Joi Ito and Northeastern University’s Jeff Howe, I found a jarring sentence. It came as part of an introductory description of how MIT Media Lab Synthetic Neurobiologist Ed Boyden looks at the human brain.

To Boyden, “The brain is more verb than noun.” Continue reading →

The Trap

About halfway through the first quarter of the Super Bowl this year I began to get the feeling that the American consumer, or at least the corporations that sell to the American consumer, were not big fans of the inward anti-globalism focus voted into office with the Trump administration. The global cultural mindset was everywhere. Coca-Cola ran an add with people from all over the world singing America the Beautiful in their native tongues. Budweiser told the story of Adolphus Busch’s immigration. And 84 Lumber (they sell wood) showed the first half of a story that had to be cut off and shown on the internet because it actually showed the dubious great wall of America.

The message was loud and clear. Americans associate positive sentiment with a modern, compassionate, global perspective. We feel warm and fuzzy about the idea of diverse cultures all longing for and participating in the American dream. That message was market tested and executed by multi-national corporations who spent $160K a second on air time to deliver it. It was not an unintentional endeavor.

There’s a trap that orbits around that message though. And it’s craftily set on both sides of the political debate to latch on to portions of the American electorate yearning for something they can’t define on their own. We independent thinkers, though, who strive to remain un-trapped in our thinking, have got some work to do to define our own views lest we get caught too.

Globalism is a pretty complicated thing. The commercials we were fed were about people and culture and diversity. And tolerance. Which is something as Americans, we’ve at least tried to be about, even if we’ve been grossly imperfect in our execution. That’s why the sentiment sells. And it’s also one side of the trap. It’s the progressive globalism trap. It pushes the notion that globalism is about people and tolerance. And if you’re about people and tolerance (I am), than you are about globalism.

Globalism is quite a bit more complicated than feeling warm happy feelings about including other people though. And in contrast, opposition to it is about more than protecting our culture and way of life from the infringement of outside forces.That’s the conservative globalism trap. That trap implies that if you are for protecting American jobs and having America first priorities, then you are for protecting our way of life from the external forces of diverse cultures and people who may come here with the intent to harm. You are therefore against immigration, legal or otherwise.

If you subscribe to either of those sentiments as a primary motivation for how you think politically, then you’ve been trapped.

In reality, globalism as we know it, the globalism that’s actually materially impacting Americans has almost nothing to do with people and cultures. And everything to do with trade and money. The standards enforced by the World Trade Organization and the outcomes that reducing barriers to free trade have ushered in an era of unprecedented global growth. They’ve drastically reduced inequality across nations. But at a cost. And that cost has been the re-distribution of wealth and the increase of income inequality within already wealthy nations like America. It’s a firm reality of economics. You grow other place’s middle class at the expense of your own.

That’s the trade side. The opening up of the international flow of capital over the last three decades has allowed money to move seamlessly from country to country. But that’s come at a cost too. And that cost has been a financial interdependence that fuels global recessions without alleviating the need for sovereign nations to bail out institutions deemed “too big to fail”.  And it’s allowed open competition for corporate earnings to drive the corporate tax rate down globally almost 50% in just a few decades.

That last one sounds like a good thing. Until of course you realized it just throws the tax burden back on private citizens while the corporations no longer paying it move their capital and jobs over seas.

The cases most politically argued for or against globalism mostly ignore these realities. They’re motivated by the polar perspectives of either caring for and tolerating all and any or protecting us from the evils and dangers of the outside. But neither one of them actually solves the pain that real hyper-globalism causes. So we’re using a “tastes great vs. less filling” debate to figure out which car to drive. It’s not answerable. And even if it was, it would get you the right answer to the wrong question.

I’m not a fan of protectionism. Historically, things like tariffs and border taxes hurt more than help. If you want to buy an iPad that was assembled by someone making union wages in Michigan, be ready to spend a lot more. And buy a lot less. But there’s a difference between full blown protectionism and allowing sovereign nations the freedom to dictate rules of trade and capital flow as they see fit to handle their domestic economic issues. And not usurping that responsibility to global governing bodies that don’t feel the impact when they go wrong and don’t have real authority to take measures to get the train back on the tracks when it falls off.

That’s the really good argument that the Trump White House could make relative to globalism.

I’ve got to hand it to them. Though I’d argue that leaving Trans Pacific Partnership is more of a signal to the base that they’re trying than a real live effort that helps, they’re on the right side of the tracks on trade. But they’ve got a deep political problem. They can’t seem to get America’s focus or energy on it. Because they’ve trapped themselves.

I once asked aloud on Twitter, where it’s easy to find the vocal Trumpers, what would be the thing that Trump could do that would anger his base to the point that they felt he had alienated them. Without hesitation, the response was clear and unambiguous. Go soft on immigration.

It’s pretty clear. In order to get a man like Donald Trump elected president, America needed to tap into the base psychology of nativism. It’s not new. It’s been around since Ben Franklin expressed concerns about the German immigrants muddying the English only waters of colonial America. It’s a bit of a political cheat button though. Because it will get certain threads of the collective American consciousness to love you. But it makes you focus on something that matters less to the material things causing the pain you promise to address. Immigration talk lathers people up. But it’s neither the cause nor the solution to the deep problem America has right now. Which is a growing income inequality gap between high skilled and low skilled labor.

Immigrants make up 13.5% of our population. And the jobs being taken by those immigrants, legal or otherwise are not the jobs responsible for the wage gaps between working class and white collar America. Those jobs have left America because of the spread of cheap global manufacturing and automation. And that is what’s driving the wage gap and the material impact on our lives and the economy.

Over the last 40 years, the world has seen globalization of trade and capital flows like no time in the last 150 years. But it has not seen a massive movement of people. No matter what any politician or talking head says. We are at our historic norms. Which means that hyper-globalization and the new modern red scare of foreigners are two distinct issues. But they’re argued like they are the same thing. When they are not. Which means the following two statements are true:

-You can argue for America first economic policies that are reasonably grounded in economic observation and reality, without ever mentioning immigration or the fear of foreigners.

-You can argue for tolerance and acceptance and inclusion of different people, without demanding lubricated free trade and movement of capital across borders.

Which means that the trap is a choice made by those who need to satisfy the already politically trapped in order to seek power. But it’s a choice that we in the middle, the ones who actually choose which ideologue sounds reasonable enough to support, don’t actually have to make.

I’ve been asked more than once if I’d ever consider running for office myself. And because I’d never be able to facilitate the kind of nonsensical idealogical circle jerk that would get me elected, the answer is no. And likely always will be. But if I were, and I were allowed to run on a reasonable platform related to things like the economy and immigration, I would say the following three things:

1- We as America, the largest economy in the world that drives the global consumption engine, absolutely reserve the right to dictate our own trade and foreign capital policies to other nations who want access to the richest economy in the world if current terms are not helping Americans.

2-Immigrants are welcome here. As are disparate cultures. But we need to account for the 11.5 million people in our borders here on an other than legal status. So they either have to go or we have to make them legal. I am for the latter for many reasons more than just cultural sensitivity inclusion and being a damn human. Which makes things like the entire sanctuary city debate irrelevant overnight.

3-America is allowed to enforce sovereign borders and sustainable immigration policy. It’s not inhumane to control who enters our country. Actually dealing with the 11.5 million undocumented people who live here humanely enables us to do this more effectively going forward.

You’ll never hear one candidate say all three. But listen hard for just how far off someone is, especially to number 1, and you’ve got a shot at picking the next leader of our country to actually get us closer to the great we think we deserve.

And watch out for traps. They work. That’s why they’re traps.