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Friday, August 18, 2023

Let He with Reservations Cast the First Vote

Disclaimer: This is not intended to support or malign any specific candidate. It is general advice promoting voting when candidates are unlikeable. Any promotion of specific candidates is a result of current polling on race, not policies or characteristics of the candidates.

Dominic Pino said something interesting on the 8/15 edition of The Editors Podcast. He argued that while a majority of Republican primary voters may support Donald Trump, a majority of Republicans probably doesn't, and almost certainly, a majority of people who might consider voting Republican also wouldn't support Trump.

This is a unique election. In my lifetime, these are the two worst candidates ever. Arguably, both are unqualified to be president, but for very different reasons. In elections before 2020, many people would complain about the quality of candidates, and it's true that the two parties' nominees are typically pretty poor representatives of the greatest America has to offer, but to a large extent, that's what the system, as it is currently constituted, can produce. That's also a very complex topic.

The difference with the 2020 election and the two front-running candidates for 2024, is that they're not just sub-optimal people, neither of them should be in the White House with any power whatsoever to make decisions for the country. Many, many people detested Hillary Clinton, but the idea that she was unqualified is ludicrous. The same can't be said for Biden and Trump. It would be easy to make an argument for either one of them that they are unqualified from holding this office.

For Biden, there's not much that can be done in a primary election, when no viable candidate wants to challenge him. For Trump, however, there is an opportunity. This will make practically everyone angry, but the most American thing a person can do is to vote in the Republican primary, for the candidate who's most likely to beat Trump.

This will make practically everyone angry, but the most American thing a person can do is to vote in the Republican primary, for the candidate who's most likely to beat Trump.

Many moderate Republicans, who despise Trump, have also developed a strong aversion to DeSantis because of his stances and focus on cultural issues. Even if they don't think DeSantis should be president, they should still vote for him in the Republican primary, assuming he stands the best chance of beating Trump. It is un-American to believe that Trump is a mortal threat to democracy, but allow him to win the primary and have a chance at becoming president. Right now, polls are pretty close. In fact, Trump has a better chance at beating Biden than DeSantis. Anything can happen between today and the 2024 election, and if you truly believe Trump is unfit for office, doing nothing but hoping things work out is a dangerous gamble.

If you truly believe Trump is unfit for office, doing nothing but hoping things work out is a dangerous gamble.

But you don't like DeSantis, and you're afraid he might win the general and become president. If you're a pro-democracy patriot, you should be okay with that, even if it's not your ideal outcome. In fact, you should want a strong contest between qualified candidates, even if it doesn't go the way you want. Whether you're a full-blooded Democrat, an ambivalent moderate, or a disaffected Republican, the most civic-minded thing you can do is vote for the Republican who stands the best chance of beating Trump.

Perhaps you think DeSantis himself is unqualified, just like Trump, so why vote for him. Here's a great test as to whether you believe a candidate is qualified. Ask yourself, why shouldn't this person be president. Come up with as many answers as you like, but try to be honest with yourself as to why you don't think they should be in office. If the reasons are all policy-related, then the candidate is qualified, but just has different positions. Shouldn't voters make that decision? Don't you want an election where voters can talk about issues and choose who better represents them and not a "my guy's awful, but their guy will usher in Ragnarok" election?

Monday, July 17, 2023

Bidenomics Sleight of Hand

President Biden is claiming the positive economic news is the result of his economic policies but neglects to mention the less-popular aspects of "Bidenomics"

In late June, President Biden sparked a medium-term news cycle by packaging all of his economic policies into a single term--Bidenomics--in an attempt to take credit for the many positive aspects of economic performance the United States has been enjoying.

Before that speech, almost no one was talking about "Bidenomics", and after it, there was a slew of articles celebrating Bidenomics and ridiculing it. In the past week, as new inflation numbers have shown that the inflation spike is largely behind us even though employment numbers remain good, the Biden team is doubling down and taking a victory lap.

To be sure, employment in the US has been excellent, defying the expectations of both pessimists and apolitical analysts. This is Biden's best economic stat. Other primary measures of economic well-being have been more mixed. The economy overall, as measured by real GDP has grown at about a 2.2% annual rate since he took office, including two quarters where it shrank. Before Covid struck, President Trump was presiding over an economy growing at 2.6% per year. In addition, its growth rate has fallen the last two quarters from 3.24% annual rate in 2022 Q3, to 2.57% in 2022 Q4 to 2.2% in 2023 Q1, perhaps due to the Fed's monetary policy.

Then, there's inflation. After peaking in June of 2022, it's been slowly receding. It's still elevated from where the Federal Reserve would prefer it, but there's less chance of a doom spiral. However, even though inflation is ebbing, real wages are still down overall, meaning workers are earning less now than they were when President Biden assumed office.

With employment high and inflation low and signs pointing to the elusive soft landing, President Biden is declaring victory on the economy. And he's ascribing his success to his unique set of policies that got us through--which he calls Bidenomics.

What exactly is Bidenomics?

In His Own Words

In his speech, he gave several explanations, some of which are vague while others are more substantive policy:

• He referred to himself as being "the most pro-union president in American history"
• "Bidenomics is about building an economy from the middle out and the bottom up"
• "making smart investments in America"
• "educating and empowering American workers to grow the middle class"
• "promoting competition to lower costs to help small businesses."
• "targeted investments"
• "We're strengthening America's economic security, our national security, our energy security, and our climate security."
• Bipartisan Infrastructure Law
  • (broadband for rural areas
  • replacing lead pipes
  • fixing "crumbling" bridges
  • upgrading power grid
  • renovating airports and ports
  • union workers, American materials)
• "I believe every American willing to work hard should be able to say where they grew up and stay where they grew up. That's Bidenomics",
• American Rescue Plan
• Increased pell grants
• Increased registered apprenticeships
• No need for a four-year degree
• Universal pre-k
• Free community college
• Affordable child-care
• Easier to join unions,
• fighting to eliminate non-competes,
• pro-small business,
• Medicare drug price negotiation,
• more affordable insurance,
• fewer junk fees
• reducing deficit (both through Covid AND budget negotiation),
• higher taxes for billionaires, no loop holes (crypto, hedge fund investors, oil companies)

Many of the items he includes in Bidenomics are a smattering of policies that any president would probably support (pro-small business, "making smarter investments in America", "educating and empowering American workers to grow the middle class", replacing lead pipes). Many more are standard-issue Democratic policies (Increased pell grants, universal pre-k, affordable childcare, more empowered unions).

White House aides, not surprisingly, said basically the same thing. They "described the term as a broad collection of policies aimed at using government muscle to revive and reshape the economy to help the middle class. They pointed to a range of efforts, including bolstering manufacturing investments, expanding high speed internet access and cracking down on industries that charge so-called junk fees." --Politico

What has Biden actually done?

So what sets Bidenomics apart from previous Democratic presidents? To answer that, let's ignore what Biden himself says and look at the economic policies he's enacted.

The most significant aspects of Biden's economic policy, most would agree, come down to the Inflation Reduction Act, Chips, the infrastructure bill, and the American Rescue Plan. There have been many other things such as some student debt forgiveness and a slew of administrative actions taken, but these probably don't make a large enough difference to the entire economy to consider here.

The American Rescue Plan, most notably, sent checks to most Americans while also expanding subsidies for the ACA healthcare exchanges. The Chips and infrastructure bill doled out hundreds of billions of dollars for microchip production and infrastructure. Lastly, the Inflation Reduction Act spent hundreds of billions of dollars subsidizing green energy and electric cars.

Many Democrats and progressives are characterizing Bidenomics as industrial policy, government picking winners and losers. In this case, the winners are solar power, wind power, the electric car industry, and microchip producers. They say industrial policy works by pointing to the growth of tech production after Democrats decided to pay tech producers to expand production. Americans should keep in mind that getting more of something that you're paying to get more of is not a sign of success.

On the surface, industrial policy always looks like a winner. The reason is because with any government spending, the successes are always more apparent than the failures. Money spent on one industry won't be spent on another. We're not going to see what industries are harmed. We're not going to see them shrink because workers and investors are going to the government spigot. China, the primary example of the kind of industrial policy Biden is touting is stagnating. Industrial policy is a long-term loser with a few, widely touted short-term winners.

Industrial policy is a long-term loser with a few, widely-touted, short-term winners.

The Parts He'd Rather You Not Think About

Add to this, though, the pieces of the economy that Biden isn't taking credit for. Interest rates are higher than they've been since before the 2008 financial crisis. Back then, the fed funds discount rate was set at a high of 6.25% before being reduced for crisis. Today it has gone up to 5.25%, rising 4.75 percentage points in 14 months. As a result, the average interest rate on a mortgage is above 6%, the highest it's been in twenty years.

Additionally, real wages have fallen. Prices have gone up faster than people's earnings have so they are effectively making less than they were when President Biden came into office. Is this one of the components of Bidenomics? If we get high employment at the expense of lower wages, is that a great deal? Before Covid, unemployment was low and wages were high--the best of both worlds.

On top of this, there are elements of Bidenomics, that neoliberals probably aren't as keen about. The protectionism, the made-in-America focus, and the debt reduction that Biden takes credit for, even if it's illusory. Many left-of-center economists have complained about the stipulations in the CHIPs act, where the Biden administration has added unrelated Democratic policies, such as childcare, as requirements to receive the money.

Americans and the media should not let President Biden ignore the unpopular economic policies under his administration.

Like many political slogans, Bidenomics has no real meaning. But Americans and the media should not let President Biden pick and choose which of the policies he's pushed "count". If he wants to say he's responsible for the good economic news, he should be held responsible for the bad news, too. And he should be asked whether he intends to maintain the debt reduction, high interest rates, and high prices that have been part of his winning, as he claims, formula.

Friday, February 3, 2023

When Competition Goes Wrong

A recent paper provides a good example of how most people's view of competition, and the benefits it produces is slightly flawed. Understanding these examples helps ensure that competition is applied correctly. In the paper, researchers learn that as more health providers were allowed to prescribe treatment, more treatments, specifically opioids, were overprescribed to the point of harming patients. If you think about this for a moment, you realize it is because the competition between health providers was driving them to provide what consumers wanted--more opioid prescriptions. So, this is a case where competition is harmful, but it helps elucidate what competition actually does.

Many people think competition produces low costs, low prices, high quality goods and services and is unconditionally beneficial, but what competition actually does is push producers and sellers toward whatever the consumer desires. For most goods and services the desires of the consumer are beneficial to her and to society: high quality, low price cars, groceries, homes, computers, etc. In the case of opioids and other products that are beneficial in limited quantities yet are harmful in higher quantities, competitive forces benefit neither. This is due to the addictive nature of opioids. Consumers desire more than is good for them and so competition among providers results in what those consumers mistakenly desire.

Vehicle Inspections

This phenomenon is not limited to opioids. When I was in graduate school, I learned this concept from a fellow student whose Ph.D. thesis analyzed vehicle emissions inspections. He found that more inspectors led to more cheating. The reason was the same. While the inspectors were meant to be acting as agents of the state, their true customers were the vehicle owners. The vehicle owners' goals were not to have low emissions but to get a Pass from the inspector and so the more inspectors there were, the more they were driven to give consumers what they wanted to the detriment of state regulations.

News Media

The history of media consumption in the United States is an extremely illustrative example of this. From the advent of television until the 1990s, there were a handful of broadcasters vying for ratings. Up until the expansion brought on by cable, they fought with each other to appeal to the broadest possible audience. This focus on the highest possible rating coupled with journalists' ideology led to a slightly left-of-center framing of news.

Seeing an opportunity to provide audiences, particularly conservative audiences, with less available news and opinion, Fox News was created and quickly attracted a huge contingent of conservatives across the country. This led to the creation of its doppelganger MSNBC which appealed to liberal audiences. Then, the internet ushered in the further fracturing of the media landscape and ever more gradations of content to satisfy extremists and moderates of both sides (though notably, nothing to appeal to people who want objective journalism). Competition between news media companies has thus created a spectrum of information providers that reflect the biases, particularly confirmation bias, and whims of the entire electorate.

Artificial Intelligence

The next battlefield over which competition may eventually do us in is AI. Several companies have been working on AI for several years, but have been reluctant to offer AI-based services to consumers. Now, with Microsoft purchasing Chat GPT, which is already offered to the public, and also planning to integrate it into its offerings, other companies will feel the pressure to do the same. This will certainly kick off a zealous competition between these companies to further the capabilities of AI in an effort to provide their customers with an amazing product for a low price, meaning an ever-more advanced artificial intelligence that could potentially rival or surpass our own.

Many have pointed out the risks of AI advancement, but for the past ten years, development has been slow and of low concern. Now that companies have entered a new era of competition to provide it to consumers, though, growth will take off. Hopefully, not to our ruin.