Links to Consider, 1/19

Jason Manning on The Origins of Woke; Alice Evans on patriarchal beliefs; Matt Weidinger on taxing government benefits; Lyn Alden on the economy and the stock market

Jason Manning writes,

The other big puzzle is that wokeness and/or victimhood culture are similarly advanced in other countries that don’t share the same laws. I’ve written elsewhere about how these countries have comparable legislation, but that just pushes the question back — why the convergence? Are there some other shared factors that help explain why law and culture evolved as they have?

He is pointing out a weakness in Richard Hanania’s thesis that wokeness was created by legal decisions. I find it more plausible to describe the fundamental cause as widespread discomfort with disparities in outcomes by identity category. If the disparities had been much smaller, there would have been no attempt to remedy them using hard-coded laws and executive orders.

Alice Evans writes,

If you want to understand any society, it’s useful to examine three core gender beliefs:

1. Men are high status, women are low status.

2. Women must be chaste, and stay away from unrelated men

3. Marriage and motherhood are paramount; divorce is shameful.

These gender beliefs were common to almost all historical societies, albeit to different degrees. Studying the global history of gender, I find that cultural change has been more rapid in places where (2) was relatively weak. Women then seized economic opportunities, demonstrated equal competence, and built institutions that uphold equal status.

Matt Weidinger writes

The problem involves “income disregard” policies that ignore the value of government benefits in calculating eligibility for welfare programs meant to help low-income individuals and families. Ignoring such income makes benefit recipients appear artificially poorer than someone with the same income from work. That encourages benefit collection over work, and artificially expands safety net programs meant for those with low incomes.

Suppose that you already get a government benefit, such as a health insurance subsidy. If you earn $5,000 more by working, you might lose the health insurance subsidy. But if you apply for food stamps worth $5,000, you won’t lose the health insurance subsidy. In that way, government benefit programs subsidize one another and penalize work.

I think that framing the problem the way that Weidinger does could help people understand it better. I’m used to framing it as “the working poor face high implicit marginal tax rates,” which is right in terms of economic analysis but doesn’t seem to penetrate the political debate.

Lyn Alden writes,

U.S. tax receipts tend to be highly correlated with year-over-year stock performance

This fact creates a feedback mechanism where downward or stagnant equity prices contribute to larger fiscal deficits, and those larger fiscal deficits can be stimulating to the equity market and the economy, and help pump those equity prices back up or at least prevent them from falling as much as bears might expect. And that feedback mechanism grows stronger over time as debts and deficits grow, and as the stock market is larger relative to GDP. Thirty years ago, the U.S. stock market was valued at about 70% of U.S. GDP whereas today it is valued at about 170% of GDP.

…Overall, I expect that the 2020s decade will be one where U.S. nominal GDP runs hotter than expected, real assets globally do pretty well (e.g. energy, infrastructure, commodities, hard monies, and some emerging market equity regions), and the most financialized assets (e.g. the S&P 500) have lackluster performance in real terms.

My emphasis. The ratio of stock market value to GDP can be thought of as the ratio of stock market value to corporate earnings time the ratio of corporate earnings to GDP. Both factors have increased.

The ratio of corporate earnings to GDP going up means that profits of public corporations are going up relative to other sources of income, including wages and small business profits. It means that prosperity is somewhat less widely shared.

substacks referenced above:

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3 Core Gender Beliefs

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Books: The Origins of Woke