Russ Roberts and Mike Munger on the political economy of DOGE; Erik Torenberg on egalitarianism; Aswath Domodaran on the stock market; Reuven Brenner on the reliability of economic data
For a decade I consulted with four large federal agencies on matters economic. I know what passes for data; I know how it gets generated; I know it is full of errors, both known and unknown. The "myth of measurement" in economics is pervasive. All aggregate economic data are wrong to an unknown extent. It would be one thing if we had any idea of the size of the error term; we don't.
Reuven Brenner is one of the most underrated economic thinkers of our time and one of my personal favorites. Thank you, Arnold, for linking his article.
Why didn’t you complain when we spent $100 billion on bailouts for Florida and North Carolina without forcing them to move all structures a mile inland and a hundred feet uphill in them hollers. Because these were Trump states of course. All MAGA hates the deep state until they want a handout
I really appreciate the emphasis on the quality of data. People constantly make claims based on data, ignoring both the difficulty of obtaining accurate data (or whether it even exists) and the incentives of those gathering and cleaning the data. That latter one especially plagues organizational data, whether private or governmental. So many choices go into measuring things and collating the data, the increase with more high level the data, that if one is less motivated by consistency and accuracy as motivated by getting specific outcomes one can generate some remarkably misleading data.
The teaching of statistics and data science that starts with "assume a lot of good data" is a serious problem, but even fixing that might not do it.
The idea to impose conditions on a federal bailout of California following what is at least in part a man-made disaster is a good one. Having the federal government take over certain state functions may not be the best approach, and yet there are strings the federal government could attach to reduce wildfire risks by aligning incentives better:
1) Allow insurance premiums to reflect wildfire risk which would discourage development in high-risk areas. 🏠
2) Reduce forest fuel loads through prescribed burns and forward-looking mitigation. 🔥
Make federal aid contingent on California helping itself by untangling regulatory and legal barriers to more sensible disaster risk mitigation. @Dominik Lett and I write about this here 👇
Erik is so very correct, without quite noting the key issue explicitly.
Life is unfair.
Unequal opportunity, from birth -- genes, environment, parental raising.
"you can’t have equality of opportunity without equality of outcome in every dimension. People don’t have the same parents, the same cultures, the same places of birth. If people have different outcomes, they have different opportunities. You can’t equalize opportunity without equalizing outcomes."
Unequal parents is not equal op; unequal genes is not equal op; unequal raising is not equal op. Even identical twins, with different names (or not???), are unequal, a little.
Reality, w/o govt, strongly punishes innocent kids from parents who do not get married, and those who commit crimes until jailed. School can't compensate, different IQs means not equal op.
We need more honesty about what to do about unequal life -- there is no "just" way to take from the lucky to give to the unlucky.
My proposed focus would be on jobs, govt jobs, Civilian Service Corps type jobs, as a job offer with enough to live on. And requirements to do the work one is told to do -- with society's job to make govt find jobs that produce the most value (least negative net outcome), even if the value of the work is less than the cost. Especially for non-college, low IQ folk, who are willing to work. Not a requirement -- but little or no other Fed govt benefits for those unwilling to work.
Warren Harding should be remembered as our greatest President because he cut the federal budget more than any other President. The government that governs least governs best.
I am struggling with understanding the values used for ERP where ERP = Expected Stock Market Return - Risk-Free Rate. How is Expected Stock Market Return calculated. I have been plotting 1-year forward PE vs 5 year actual return of the S&P 500 for the last 70 years and it results is a “near linear” chart. At the current 23X forward PE, the historical future 5 year actual return is near 0%. Help me understand Arnold’s excerpt???
“How much inequality is tolerable?” When I contemplate the inequality in wealth between Elon Musk and me, and between me and some central African peasant or Middle Eastern refugee, I must say, “An enormous amount.”
"Avoid the political" - I don't even know what this would mean, we are so far from such a situation in my state. In fact: is it political? How does one define that here without its meaning - the rewarding of the friends (donors)? This is entirely how infrastructure happens in my state: and the analyses I see on econ blogs *never* entertain the most salient possibility of all - that things are "done" that ought not to have been done at all!
I have hardly the patience to go through, yet again, all the impoundments that citizens must fight for years, fight the taking, fight the loss of their rural livelihoods; fight the giant hole of money that is never presented honestly (in the last go-round of a particular one I'm interested in, the engineering firm didn't even include the cost of the land!); fight the consequences (the local sheriff who testified that the last thing his county needed was another fake lake for the cops to respond to drunken boaters); all for a situation where no one, absolutely no one, in the city is without water for all their rational needs, and much waste goes on.
Oh, there's always going to be a boon in housing development around these lakes. Somehow they just turn into slums of old trailers most of the time. Bankruptcy generally ensues.
Here's a sign of how twisted it all is - the largest reservoir in the water plan - that has been hanging over people's heads for 40 years, that's a hell of a libertarian nightmare for you - is to be named for the water hustler who first proposed it!
The citizens who will decide the roads? How about this: we had a long-time gov who was literally the creation of some money men. He was plucked from the herd, because he was a good-looking young Democrat. Like: here's your suit and tie, you're a Republican now; here's a gift of money to buy a house on the lake, that one of us owns, for a song and in a couple or three years we will buy it back from you at treble the price, thus setting you up with some dough, and here's a list of all the people who will need favors.
The position of executive director of the state DOT came vacant - that's the chief of the 5 commissioners (your "citizens") who vote on road projects or goals or budget or whatnot.
Who did my good governor select for his position? Why, his secretary of course!
Munger is of course correct that statutes need to be repealed. The requirement in the first Trump administration for each new regulation to be accompanied with measures repealing 3 others wasn't a bad one albeit a little limp. Trump ought to consider declaring that he will veto any bill that doesn't repeal at least 25 sections of the United States Code for every new one added. Then we might begin to achieve some small increment of liberation.
The constant drumbeat of "it's probably going to fail" concern trolling about DOGE is annoying to me. Everyone gets that it's hard to reduce the size of government, and most people who read such articles already have a good sense of why.
For a decade I consulted with four large federal agencies on matters economic. I know what passes for data; I know how it gets generated; I know it is full of errors, both known and unknown. The "myth of measurement" in economics is pervasive. All aggregate economic data are wrong to an unknown extent. It would be one thing if we had any idea of the size of the error term; we don't.
Reuven Brenner is one of the most underrated economic thinkers of our time and one of my personal favorites. Thank you, Arnold, for linking his article.
Why didn’t you complain when we spent $100 billion on bailouts for Florida and North Carolina without forcing them to move all structures a mile inland and a hundred feet uphill in them hollers. Because these were Trump states of course. All MAGA hates the deep state until they want a handout
Hawaii got handouts for fires, too.
California will get a handout for fires, too. Elon Musk once lived there.
I really appreciate the emphasis on the quality of data. People constantly make claims based on data, ignoring both the difficulty of obtaining accurate data (or whether it even exists) and the incentives of those gathering and cleaning the data. That latter one especially plagues organizational data, whether private or governmental. So many choices go into measuring things and collating the data, the increase with more high level the data, that if one is less motivated by consistency and accuracy as motivated by getting specific outcomes one can generate some remarkably misleading data.
The teaching of statistics and data science that starts with "assume a lot of good data" is a serious problem, but even fixing that might not do it.
The idea to impose conditions on a federal bailout of California following what is at least in part a man-made disaster is a good one. Having the federal government take over certain state functions may not be the best approach, and yet there are strings the federal government could attach to reduce wildfire risks by aligning incentives better:
1) Allow insurance premiums to reflect wildfire risk which would discourage development in high-risk areas. 🏠
2) Reduce forest fuel loads through prescribed burns and forward-looking mitigation. 🔥
Make federal aid contingent on California helping itself by untangling regulatory and legal barriers to more sensible disaster risk mitigation. @Dominik Lett and I write about this here 👇
https://open.substack.com/pub/debtdispatch/p/the-case-for-conditioning-disaster
The Federal government owns approximately 45% of the land in California. It doesn’t need state permission to do prescribed burns
Sounds good in theory. Will it apply as well to storm damages in Florida and the Carolinas? Flooding in Houston?
Somewhere I hear Basitat mentioning unintended consequences.
One can't simply replace the government as a centralized authority with some other centralized authority and have a better outcome.
Fannie Mae & Freddie Mac will never privatised
Not without a government guarantee.
Erik is so very correct, without quite noting the key issue explicitly.
Life is unfair.
Unequal opportunity, from birth -- genes, environment, parental raising.
"you can’t have equality of opportunity without equality of outcome in every dimension. People don’t have the same parents, the same cultures, the same places of birth. If people have different outcomes, they have different opportunities. You can’t equalize opportunity without equalizing outcomes."
Unequal parents is not equal op; unequal genes is not equal op; unequal raising is not equal op. Even identical twins, with different names (or not???), are unequal, a little.
Reality, w/o govt, strongly punishes innocent kids from parents who do not get married, and those who commit crimes until jailed. School can't compensate, different IQs means not equal op.
We need more honesty about what to do about unequal life -- there is no "just" way to take from the lucky to give to the unlucky.
My proposed focus would be on jobs, govt jobs, Civilian Service Corps type jobs, as a job offer with enough to live on. And requirements to do the work one is told to do -- with society's job to make govt find jobs that produce the most value (least negative net outcome), even if the value of the work is less than the cost. Especially for non-college, low IQ folk, who are willing to work. Not a requirement -- but little or no other Fed govt benefits for those unwilling to work.
Warren Harding should be remembered as our greatest President because he cut the federal budget more than any other President. The government that governs least governs best.
I am struggling with understanding the values used for ERP where ERP = Expected Stock Market Return - Risk-Free Rate. How is Expected Stock Market Return calculated. I have been plotting 1-year forward PE vs 5 year actual return of the S&P 500 for the last 70 years and it results is a “near linear” chart. At the current 23X forward PE, the historical future 5 year actual return is near 0%. Help me understand Arnold’s excerpt???
“How much inequality is tolerable?” When I contemplate the inequality in wealth between Elon Musk and me, and between me and some central African peasant or Middle Eastern refugee, I must say, “An enormous amount.”
Democrats will be satisfied when everyone has the same amount of wealth.
Even if it’s near zero (the notorious “leveling down”).
"Avoid the political" - I don't even know what this would mean, we are so far from such a situation in my state. In fact: is it political? How does one define that here without its meaning - the rewarding of the friends (donors)? This is entirely how infrastructure happens in my state: and the analyses I see on econ blogs *never* entertain the most salient possibility of all - that things are "done" that ought not to have been done at all!
I have hardly the patience to go through, yet again, all the impoundments that citizens must fight for years, fight the taking, fight the loss of their rural livelihoods; fight the giant hole of money that is never presented honestly (in the last go-round of a particular one I'm interested in, the engineering firm didn't even include the cost of the land!); fight the consequences (the local sheriff who testified that the last thing his county needed was another fake lake for the cops to respond to drunken boaters); all for a situation where no one, absolutely no one, in the city is without water for all their rational needs, and much waste goes on.
Oh, there's always going to be a boon in housing development around these lakes. Somehow they just turn into slums of old trailers most of the time. Bankruptcy generally ensues.
Here's a sign of how twisted it all is - the largest reservoir in the water plan - that has been hanging over people's heads for 40 years, that's a hell of a libertarian nightmare for you - is to be named for the water hustler who first proposed it!
The citizens who will decide the roads? How about this: we had a long-time gov who was literally the creation of some money men. He was plucked from the herd, because he was a good-looking young Democrat. Like: here's your suit and tie, you're a Republican now; here's a gift of money to buy a house on the lake, that one of us owns, for a song and in a couple or three years we will buy it back from you at treble the price, thus setting you up with some dough, and here's a list of all the people who will need favors.
The position of executive director of the state DOT came vacant - that's the chief of the 5 commissioners (your "citizens") who vote on road projects or goals or budget or whatnot.
Who did my good governor select for his position? Why, his secretary of course!
Munger is of course correct that statutes need to be repealed. The requirement in the first Trump administration for each new regulation to be accompanied with measures repealing 3 others wasn't a bad one albeit a little limp. Trump ought to consider declaring that he will veto any bill that doesn't repeal at least 25 sections of the United States Code for every new one added. Then we might begin to achieve some small increment of liberation.
The constant drumbeat of "it's probably going to fail" concern trolling about DOGE is annoying to me. Everyone gets that it's hard to reduce the size of government, and most people who read such articles already have a good sense of why.
It’s all about the quality of the data