Keeping up with the FITs, 7/25
Allison Shrager on HBS Woke Capitalists; A teacher tells horror stories to Wesley Yang; Tyler Cowen on American robustness; Renaud Beauchard on French fragility
For my Bloomberg column, I spoke to several professors and students about what changed. Some of it stems from more international and female students. It also comes from how the management consulting industry has changed. Before, if you worked at McKinsey as an analyst, you learned how to increase your client’s bottom line. Now, you help them achieve loftier (harder to evaluate) goals. If you desire a career climbing the corporate ladder these days, you can’t be seen as a Gordon Gecko type anymore. You need to sell companies on the idea you can make them ESG compliant and avoid HR issues. In that way, these capitalism skeptics may just be good capitalists. If Larry Fink sometimes sounds like an ambivalent capitalist (and capitalism has been pretty good to him), what can we expect of new MBAs?
I suspect that the admissions office of the Harvard Business School behaves like other Woke university administrators, and their tastes shape the student body there.
On Wesley Yang’s substack, a teacher writes,
a senior teacher literally spoke the words Trying to register more students of color for AP classes is inherently racist and Putting greater value on AP classes at all is an expression of white supremacy, to an audience of other teachers who nodded along or otherwise kept quiet.
…we were working to approve a new weekly schedule for students. When I said I was concerned that it would require leaving some sections of the curriculum untaught, a colleague said that might actually be a good thing, because most of our students are white and their test scores dropping slightly would help shrink the racial achievement gap in our state.
American soft power is far more robust than many criticisms would indicate. English is increasingly entrenched as the global language. The world’s major internet companies are still largely American, with the exception of some Chinese ones. If the internet continues to become more important in our lives, that is another plus for the US — and the dollar.
He is trying to explain why the dollar has gotten stronger, given the many problems we are having. I think that this is a case of what economist Steve Roach once termed the “tallest pygmy” phenomenon. If you are an international investor, which stock would you rather own right now—a U.S. tech company or a German manufacturing firm? Given the talk of rationing natural gas in Europe, the American tech company probably seems like a safer bet.
Note that the standard economic analysis of exchange rate movements involves interest-rate differentials. The simplest story is that when interest rates went up in the U.S., this attracted savings from other countries and the dollar went up. Then last week, when the ECB raised rates in Europe, the dollar stabilized.
Speaking of Europe, on N.S. Lyons’ substack, Renaud Beauchard writes,
Judging from the mood all over Europe, with new “peasant revolts” plus a Russia about to completely turn off the tap of the gas supply, Macron and his government have every reason to be worried about a popular anger which is already several notches above what it was when the massive Gilets Jaunes (“Yellow Vest”) protests erupted in late 2018. As bad as the Gilets Jaunes protests were for Macron then, the movement happened in an economic context incommensurably better than the current one, and while Macron also enjoyed an overwhelming majority in the National Assembly. Now Macron is facing an opposition which will be in a very good position to explain to the discontents why they should be discontented.
His essay ends with these words:
the felicitous promises of the greatest illusion of all, the illusion of progress, are now gone, and have left behind a full-blown techno-totalitarian nightmare – one which the COVID years have now laid bare. We are at a junction where we have no other choice than to conceive of that other society, or let the “ultra-minority” continue its onslaught. This is at the same time exciting and frightening.
I’d take the tallest Pygmy line a little farther still: the USA has not had massive food riots like the rest of the world, or strikes by farmers and other critical industries. So far we have managed to be slightly less insane than much of the rest of the world, if only just.
"the felicitous promises of the greatest illusion of all, the illusion of progress, are now gone, and have left behind a full-blown techno-totalitarian nightmare"
But what if progress is not an illusion, but something that can be promoted by good government?