Monday's Zoom session; Jeremy Horpedahl on wealth; Joel Kotkin on Europe; Jennifer Burns on Milton Friedman; Jason Manning on racial conflict a century ago
My personal theory on the "failure to preserve the industrial base" point is that it derived from two things: opportunity in Asia and a loss of appetite for the grind of internal labor conflict. Fighting over industrial labor and pollution issues is unpleasant. It requires a lot of ungenteel and flinty attitudes. It requires a lot of natural resources, also necessitating work with the grubby sort of person who lives underground. It breaks down the caste system that most leadership cadres prefer and supplants it with a dirty and conflict-ridden sort of egalitarianism. When you offshore industrial production, you also offshore all of its externalities (both POSITIVE and NEGATIVE). This type of specialization and trade can only survive so long as the security of the supply lines do.
It can also be difficult to sustain because, as humans are corporeal beings, control of the stuff of the physical world will always provide you with insurmountable leverage over the people who control the stuff of the spirit.
If housing goes up I'd say that it doesn't increase wealth at all.
If I sell my house I have to buy another house.
If try to borrow against my house rates on home equity loans are now a lot higher, so while the balance you may be lent is higher it costs a lot more to borrow that money.
I could maybe see how certain kinds of people might benefit on the margin. Say, a retired couple downsizing benefits a tinie bit from house price inflation. But the fact that their reverse mortgage is more expensive probably outweighs it.
The only real winners are people who locked in thirty year mortgages two years ago, but what they "win" is being trapped in their golden handcuff house whether they like it or not.
Correct! Just like a nominal rise in prices doesn't increase real national income. A rise in wealth from housing prices is illusory on a national level in most cases, as are increases in stock prices without an underlying increase in earnings. If a stock has a 2% dividend and doubles so that the dividend is 1% then the net gain is zero, you have just made it more expensive to purchase a 2% return. One group (stock sellers) might benefit at the expense of another group (stock buyers) but the net is zero on a national level. This is recognized when it comes to CPI etc, but its magic when its 'wealth' that is being created because we don't have a real wealth deflator.
This is not true for the large minority of folks who have a second house, or more—when their 300k house in 2013 becomes a 600k house in 2023, that’s just as much a wealth increase as Apple stock owners seeing their 300k go up to 600k, tho rates of increase ROI differ.
Most homeownership is by owners whose main asset IS their house. That their wealth has gone up is seen clearly in comparison to same equal income folk who rented instead, and invested in themselves with more education, more life experience traveling, more time saving eating out, and a full 401k investment. Such non homeowners have less wealth, and far far more trouble buying a house.
Their lack of golden cuffs, allowing them to move easily to higher paying jobs, does compensate some; without data I believe it’s pretty small.
I certainly think that non-homeowners have lost wealth relative to homeowners. COVID policy destroyed wealth and it was easier to take that wealth from some assets rather than others, as it always is.
I'm just not convinced that your typical (single) homeowner gained wealth.
“[W]e are much wealthier than we were a few years ago. But are we, really?”
Inflation increases the value to assets such as homes, stocks, art, and precious metals making their owners wealthier on paper, and increasing the gap between rich and poor. Of course, the gap will shrink when the Fed’s policy-driven boom turns into a policy-driven bust and much of that paper wealth disappears. Unfortunately, the resentments caused by the wealth gap won’t shrink as quickly as will the gap itself.
He noted that, when he's thinking, he doesn't look at the camera. I noticed that, too. Very unlike a teacher, but good conversation. He tweets a lot with graphs, plus a note about a big Philly commercial REIT that's likely to go bust next month as loans come due.
Links have interesting connection points.
Office buildings have NOT been going up like houses. As the money printing goes brr, asset prices go up up up but Big Macs only go up a bit - maybe less than median wages. Are homeowners wealthier? If you want to buy products, or consume, you're wealthier and can trade wealth for consumption. But most folk can live comfy on their income, or less, so maintaining is easier, but getting wealthier is much harder.
My disagreement with "Uncle Milton" is that big inflation requires both money printing, and limited supply of Consumer Products, since CPI doesn't include asset inflation. With supply chains cut, prices rose fast. Many businesses possibly raised prices "more" than they needed, so now those companies can slowly reduce prices until they get the market share they're aiming for, or the minimum profit margin (lowest price) they're willing to sell at. No shortage of product, no hyperinflation, no matter how much money the gov't throws out.
Great link to talk of Friedman's biography by J. Burns. So many good notes. He often spoke at Libertarian events in Silicon Valley and for Stanford student groups. Considered himself an R-Republican, but small-l libertarian. Very supportive of the freedom principles. Was surprised that Burns didn't even mention the hugely popular "Free To Choose". His view was to favor open borders AND no gov't welfare -- given the political reality of welfare, he supported border controls to reduce the free riders.
Joel Kotkin notes the culture war problem of too many immigrants not being assimilated within the culture they've immigrated into, instead bringing most of their sub-optimal cultural norms with them. He points out that most of Europe, tho not Hungary, is in worse shape than America.
How long will rich lenders lend to the US gov't? Until they can find a better alternative -- unlikely to be Europe. Or China. Or Russia; India; Pakistan; Brazil; South Africa.... nor even Bitcoin. Back to gold??? nahhhh.
Black Riots - only a hundred years ago. Irish & Polish in unions against non-union Blacks, "scabs" - were not allowed to join unions by the unions. Great review; but maybe so good I won't even need to read the book. When Arnold mentions Malcom X, I recall how Malcom X wrote that many Polish Catholic girls wanted to have sex with a Black man; a really really dark Black man.
I haven't seen a karaoke version of Zappa's Catholic Girls, but I did already sing his Jewish Princess, which was from one of his best albums, the 1979 Sheik Yerbouti. I like pop.
"Hence, we are much wealthier than we were a few years ago. But are we, really? The houses are the same houses. The companies are the same companies. "
I'd argue the companies are not the same, though I suppose I'd agree the changes in companies are less than the change in values over most time periods.
> Europeans are unwilling to preserve their industrial base and control their borders, leaving the continent increasingly weak and largely defenseless.
And America is? Lol, lmao even. American military-industrial complex is half the reason it still has any advanced manufacturing left, and yet it struggles to produce enough munitions to support allies (or clients if you prefer, I won't quibble) in one mid-size and one tiny war, and it balks at paying the money which supports said manufacturing. Kotkin's idea of advanced industries seems to lean towards the world of bits rather than atoms; in reality, bits won't save you from atoms falling on your head, and American defense and other manufacturers buy machine tools (or modules for same) and high-end steels from Europe and Japan just as everyone else including Russia and China do. The point about borders is simply laughable. I'll stipulate that America does have a bit better demographics, somewhat lower taxes and less stifling regulation in some places, but there is not a radical difference.
“Hence, we are much wealthier than we were a few years ago. But are we, really? The houses are the same houses. The companies are the same companies. What is different is how the market values them. “
And the rising price increases property taxes. If house prices went up faster than income, after-tax income went down, except to the extent that property taxes are subject to caps.
Isabel Wilkerson's book _The Warmth of Other Suns_ is worth reading if you want to understand the Great Migration more deeply. Whether or not you agree with her conclusions, the individual stories she tells are compelling and the compare-and-contrast she draws between black migrants and other refugees from persecution is a thought-provoking one.
If Europe even if only in some dumb unconscious way is retreating from the rest of the globe - as represented by slowly* retreating from "food production for developing nations" - while essentially under invasion from the rest of the world - it is hard at first pass not to see that as a survival strategy. Maybe prosperity is not the only thing at stake.
Suppose for an instant that you believed climate change was a threat to things you cared about. This will require a good deal of imagination for the commentariat, I realize. Say biodiversity, bird populations, even mammal populations, native plant species and invasives .... precisely things that, e.g., an English or European aristocrat would have cared about, were they switched in time.
Would it seem like a measure of strength and prosperity that you were not permitted to care about those things, because they conflicted with a universalizing, Marxist-like humanism? Whether or no the free market had irreversibly triumphed, that you must remain in thrall to Marx in this way? Or because a Joel Kotkin would always be ready to pop up and say - ah, here is a consequence you hadn't reckoned with - so while everything else we allow you to do in your "classical liberal" way may and probably will and often has had terrible consequences - all those we give a pass to - but not this one, because it doesn't center humans enough, and it seems not to serve globalism!
*Things can be done slowly, or precipitously. Does Kotkin find the population numbers tell him that e.g. the Dutch can feed the world indefinitely?
America in the late 1890s through 1970s had massive demand for unskilled labor to work in industrial factorys (especially in cities of the now Rust Belt). It sucked in immigrants from Europe (which mostly worked out) and it sucked up blacks from the south.
For a time simply being an American citizen and willing to punch a clock every day entitled one to a very good standard of living.
Furthermore, to capitalize on this unions needed to bring blacks into the system rather than be strikebreakers.
Twas not to last. Eventually the unique circumstances that made unskilled black labor temporarily valuable vanished. With that the Rust Belt was left with all the negatives of blacks and without the positives of factory workers for a bustling industrial economy. In the long run they probably would have been better off if The Great Migration never happened.
My personal theory on the "failure to preserve the industrial base" point is that it derived from two things: opportunity in Asia and a loss of appetite for the grind of internal labor conflict. Fighting over industrial labor and pollution issues is unpleasant. It requires a lot of ungenteel and flinty attitudes. It requires a lot of natural resources, also necessitating work with the grubby sort of person who lives underground. It breaks down the caste system that most leadership cadres prefer and supplants it with a dirty and conflict-ridden sort of egalitarianism. When you offshore industrial production, you also offshore all of its externalities (both POSITIVE and NEGATIVE). This type of specialization and trade can only survive so long as the security of the supply lines do.
It can also be difficult to sustain because, as humans are corporeal beings, control of the stuff of the physical world will always provide you with insurmountable leverage over the people who control the stuff of the spirit.
If housing goes up I'd say that it doesn't increase wealth at all.
If I sell my house I have to buy another house.
If try to borrow against my house rates on home equity loans are now a lot higher, so while the balance you may be lent is higher it costs a lot more to borrow that money.
I could maybe see how certain kinds of people might benefit on the margin. Say, a retired couple downsizing benefits a tinie bit from house price inflation. But the fact that their reverse mortgage is more expensive probably outweighs it.
The only real winners are people who locked in thirty year mortgages two years ago, but what they "win" is being trapped in their golden handcuff house whether they like it or not.
Correct! Just like a nominal rise in prices doesn't increase real national income. A rise in wealth from housing prices is illusory on a national level in most cases, as are increases in stock prices without an underlying increase in earnings. If a stock has a 2% dividend and doubles so that the dividend is 1% then the net gain is zero, you have just made it more expensive to purchase a 2% return. One group (stock sellers) might benefit at the expense of another group (stock buyers) but the net is zero on a national level. This is recognized when it comes to CPI etc, but its magic when its 'wealth' that is being created because we don't have a real wealth deflator.
This is not true for the large minority of folks who have a second house, or more—when their 300k house in 2013 becomes a 600k house in 2023, that’s just as much a wealth increase as Apple stock owners seeing their 300k go up to 600k, tho rates of increase ROI differ.
Most homeownership is by owners whose main asset IS their house. That their wealth has gone up is seen clearly in comparison to same equal income folk who rented instead, and invested in themselves with more education, more life experience traveling, more time saving eating out, and a full 401k investment. Such non homeowners have less wealth, and far far more trouble buying a house.
Their lack of golden cuffs, allowing them to move easily to higher paying jobs, does compensate some; without data I believe it’s pretty small.
I certainly think that non-homeowners have lost wealth relative to homeowners. COVID policy destroyed wealth and it was easier to take that wealth from some assets rather than others, as it always is.
I'm just not convinced that your typical (single) homeowner gained wealth.
“[W]e are much wealthier than we were a few years ago. But are we, really?”
Inflation increases the value to assets such as homes, stocks, art, and precious metals making their owners wealthier on paper, and increasing the gap between rich and poor. Of course, the gap will shrink when the Fed’s policy-driven boom turns into a policy-driven bust and much of that paper wealth disappears. Unfortunately, the resentments caused by the wealth gap won’t shrink as quickly as will the gap itself.
Thanks for fine zoom meeting with Moses Sternstein. I'm now following him on X at:
https://twitter.com/MosesSternstein
He noted that, when he's thinking, he doesn't look at the camera. I noticed that, too. Very unlike a teacher, but good conversation. He tweets a lot with graphs, plus a note about a big Philly commercial REIT that's likely to go bust next month as loans come due.
Links have interesting connection points.
Office buildings have NOT been going up like houses. As the money printing goes brr, asset prices go up up up but Big Macs only go up a bit - maybe less than median wages. Are homeowners wealthier? If you want to buy products, or consume, you're wealthier and can trade wealth for consumption. But most folk can live comfy on their income, or less, so maintaining is easier, but getting wealthier is much harder.
My disagreement with "Uncle Milton" is that big inflation requires both money printing, and limited supply of Consumer Products, since CPI doesn't include asset inflation. With supply chains cut, prices rose fast. Many businesses possibly raised prices "more" than they needed, so now those companies can slowly reduce prices until they get the market share they're aiming for, or the minimum profit margin (lowest price) they're willing to sell at. No shortage of product, no hyperinflation, no matter how much money the gov't throws out.
Great link to talk of Friedman's biography by J. Burns. So many good notes. He often spoke at Libertarian events in Silicon Valley and for Stanford student groups. Considered himself an R-Republican, but small-l libertarian. Very supportive of the freedom principles. Was surprised that Burns didn't even mention the hugely popular "Free To Choose". His view was to favor open borders AND no gov't welfare -- given the political reality of welfare, he supported border controls to reduce the free riders.
Joel Kotkin notes the culture war problem of too many immigrants not being assimilated within the culture they've immigrated into, instead bringing most of their sub-optimal cultural norms with them. He points out that most of Europe, tho not Hungary, is in worse shape than America.
How long will rich lenders lend to the US gov't? Until they can find a better alternative -- unlikely to be Europe. Or China. Or Russia; India; Pakistan; Brazil; South Africa.... nor even Bitcoin. Back to gold??? nahhhh.
Black Riots - only a hundred years ago. Irish & Polish in unions against non-union Blacks, "scabs" - were not allowed to join unions by the unions. Great review; but maybe so good I won't even need to read the book. When Arnold mentions Malcom X, I recall how Malcom X wrote that many Polish Catholic girls wanted to have sex with a Black man; a really really dark Black man.
I haven't seen a karaoke version of Zappa's Catholic Girls, but I did already sing his Jewish Princess, which was from one of his best albums, the 1979 Sheik Yerbouti. I like pop.
"Hence, we are much wealthier than we were a few years ago. But are we, really? The houses are the same houses. The companies are the same companies. "
I'd argue the companies are not the same, though I suppose I'd agree the changes in companies are less than the change in values over most time periods.
> Europeans are unwilling to preserve their industrial base and control their borders, leaving the continent increasingly weak and largely defenseless.
And America is? Lol, lmao even. American military-industrial complex is half the reason it still has any advanced manufacturing left, and yet it struggles to produce enough munitions to support allies (or clients if you prefer, I won't quibble) in one mid-size and one tiny war, and it balks at paying the money which supports said manufacturing. Kotkin's idea of advanced industries seems to lean towards the world of bits rather than atoms; in reality, bits won't save you from atoms falling on your head, and American defense and other manufacturers buy machine tools (or modules for same) and high-end steels from Europe and Japan just as everyone else including Russia and China do. The point about borders is simply laughable. I'll stipulate that America does have a bit better demographics, somewhat lower taxes and less stifling regulation in some places, but there is not a radical difference.
“Hence, we are much wealthier than we were a few years ago. But are we, really? The houses are the same houses. The companies are the same companies. What is different is how the market values them. “
And the rising price increases property taxes. If house prices went up faster than income, after-tax income went down, except to the extent that property taxes are subject to caps.
Isabel Wilkerson's book _The Warmth of Other Suns_ is worth reading if you want to understand the Great Migration more deeply. Whether or not you agree with her conclusions, the individual stories she tells are compelling and the compare-and-contrast she draws between black migrants and other refugees from persecution is a thought-provoking one.
If Europe even if only in some dumb unconscious way is retreating from the rest of the globe - as represented by slowly* retreating from "food production for developing nations" - while essentially under invasion from the rest of the world - it is hard at first pass not to see that as a survival strategy. Maybe prosperity is not the only thing at stake.
Suppose for an instant that you believed climate change was a threat to things you cared about. This will require a good deal of imagination for the commentariat, I realize. Say biodiversity, bird populations, even mammal populations, native plant species and invasives .... precisely things that, e.g., an English or European aristocrat would have cared about, were they switched in time.
Would it seem like a measure of strength and prosperity that you were not permitted to care about those things, because they conflicted with a universalizing, Marxist-like humanism? Whether or no the free market had irreversibly triumphed, that you must remain in thrall to Marx in this way? Or because a Joel Kotkin would always be ready to pop up and say - ah, here is a consequence you hadn't reckoned with - so while everything else we allow you to do in your "classical liberal" way may and probably will and often has had terrible consequences - all those we give a pass to - but not this one, because it doesn't center humans enough, and it seems not to serve globalism!
*Things can be done slowly, or precipitously. Does Kotkin find the population numbers tell him that e.g. the Dutch can feed the world indefinitely?
America in the late 1890s through 1970s had massive demand for unskilled labor to work in industrial factorys (especially in cities of the now Rust Belt). It sucked in immigrants from Europe (which mostly worked out) and it sucked up blacks from the south.
For a time simply being an American citizen and willing to punch a clock every day entitled one to a very good standard of living.
Furthermore, to capitalize on this unions needed to bring blacks into the system rather than be strikebreakers.
Twas not to last. Eventually the unique circumstances that made unskilled black labor temporarily valuable vanished. With that the Rust Belt was left with all the negatives of blacks and without the positives of factory workers for a bustling industrial economy. In the long run they probably would have been better off if The Great Migration never happened.
Or if slavery had never happened?
I tend to be a Unionist who thinks conflict with the Slavocracy was inevitable and the Civil War had to be fought.
But the strongest argument for letting the South go would be the hope that the Great Migration never happened and ruined the North.