Theodore Dalrymple on non-proportional representation; Allison Schrager on the private equity bubble; Peter Zeihan on American political upheaval; The Peterson Institute on the Budget
Who are you thinking of as potential Mileis? I don't see anyone besides Vivek who would plausibly AFUERA any government departments.
I think if Milei himself were to run, he could win (or at least has a good shot). His policy would appeal to both elites (who believe more in markets) and non-elites (who love the generic idea of shutting down government departments), and his style is more entertaining than Trump -- bombastic & superlative with more props. It seems like a successful formula and if I were a politician I would attempt to emulate it.
As long as the politicians relay on bread and circus policies, the voters (at least a very large percentage) will shun anything that subverts policies supporting the entrenched philosophy of "comfort at all cost."
The politicians are listening to their donors (the most important people who also run most of society's important institutions) and secondarily to their constituents. Their constituents generally want free government money, infinite pills, and infinite surgery without wanting to work. They also do not want to do any duties for the government or to be subject to conscription. That is the true bipartisan popular consensus. If you try to tell them that there is no magic money tree they will look at you like you are Hitler with devil horns.
The only thing that might force a reckoning is major military defeat or the central banks Trussing governments repeatedly until they do as instructed. We are going into a world in which the modal citizen is basically going to the doctor all day long on the back of their government checks. Nothing in history or archeology has uncovered a society that runs on similar principles in which a small class of laborers and artisans works all day to support a massive number of methuselahs getting angry at Facebook, so we will see how the experiment works out.
This has been the "philosophical" norm in the American West for a long time: "hostile-yet-dependent" as writer Frederick Swanson points out in a thorough treatment of Utah's public lands, referencing Bernard DeVoto's (famous? forgotten?) essay "The West against Itself".
"Similarly, in France, the far-right party had a much lower seats/vote ratio than the left-wing coalition. This is not conducive to the public buying into the electoral outcome."
I'm more than a little perplexed why this is a problem. I'd be more worried if the minority vote-getters had more than proportional representation. Are you also concerned the libertarian party gets a couple percent of the vote but no representation?
It's funny how each side is concerned about "unfairness" that harms them more. Democrats often talk about the unfairness of the electoral college that favors small Republican states. Does that concern you too?
I don’t have an opinion about European parliamentary democracy except to be grateful we at least keep to a calendar here, which is the last thing that stands between sanity and politics taking over our whole private lives. But I think what the blogger is talking about would still require elections? Whereas, getting rid of the EC would mean we no longer needed to hold elections outside of cities.
Disenfranchising the people who grow your food might not be such a winning idea. Unless a show of strength is the most important thing.
I was surprised Alison Schrager said that "food-at-home" has had near-zero inflation. That is the only food I eat, and that has not been my experience. However, as a pessimist, I am perfectly prepared to accept that there are other reasons for higher grocery prices and that they will only continue to increase.
I can also see that the big (only) grocery in my area is trying to push people away from cooking and toward buying all food in prepared packaged form. So that could be involved, I guess, particularly in their wanting maybe to decrease the delta between those options: cook, or walk out with a plastic container of food. But that's not how I shop.
Before an American Javier Milei, there will need to be a Cassandra Devine like in Christopher Buckley's "Boomsday"
"Outraged over the mounting Social Security debt, Cassandra Devine, a charismatic 29-year-old blogger and member of Generation Whatever, incites massive cultural warfare when she politely suggests that Baby Boomers be given government incentives to kill themselves by age 75. Her modest proposal catches fire with millions of citizens, chief among them "an ambitious senator seeking the presidency." With the help of Washington's greatest spin doctor, the blogger and the politician try to ride the issue of euthanasia for Boomers (called "transitioning") all the way to the White House, over the objections of the Religious Right, and of course, the Baby Boomers, who are deeply offended by demonstrations on the golf courses of their retirement resorts."
I hope that this English results lead you to ask for parlamentarianism and proportional representation in the US, a county as much in need of them as England or France.
Theodore Dalrymple is really a treasure. His lack of public profile (I have never once for instance seen him on TV though he was talked over by Jordan Peterson for ninety minutes on the latter's podcast) may be rather deliberate, but is extraordinary all the same given the quality of writing and quantity plus breadth of material. His old travelogues written under his real name (Anthony Daniels) are actually rather obscure now, but I can't think of a better chronicler of Britain's rot. If he was starting out today I suppose he'd need a Substack.
US deficits won’t stop increasing until the Dem Party opposes spending because of deficits. The Dem media for decades has been demonizing all responsible efforts to make a balanced budget, or even to reduce the growth of spending.
It will help if Republicans get a 60+ Senate majority, the Presidency, and a majority in Congress, which is plausible if they redirect govt spending to the three middle income quintiles, while reducing tax subsidies/exemptions to tax exempt edu orgs & NGOs who should be paying “their fair share”.
There also needs to be a crisis in Japan or Germany, France, or the UK, or Canada, which is a clear demonstration of 250% debt/gdp being unsustainable in the 21st century—some other rich country having big problems because of debt. China stumbling won’t teach that lesson.
Lack of crisis in Japan, since their 1989 crash, includes 35 years of huge deficits. How many years are needed before it looks like a
Pattern of Sustainable Govt Debt Increases?
The rich who got bailed out by Rep Bush43, plus Obama, are understandably supportive of govt spending that increases median wealth by 1% but top 1% wealth by 5 or 10%—“everybody’s getting richer” ( if they have a job).
Zeihan: I think it is pretty clear that with Trump you will get larger deficits, less merit based immigration and more protectionist trade policies than Harris (however inadequate she will be on these same policies). That's enough for me.
As the saying goes, it is difficult to make predictions, especially about the future. What's Zeihan's track record? I reviewed his video on the start of the Ukrainian counter-offensive from a year ago, and it is full of wishful thinking about what the Ukrainian military might accomplish, and casts negative aspersions on the likely performance of the Russian military (suggesting that Russian conscripts have a propensity to 'cut and run'). How'd that work out? Today there is a Zeihan video titled 'Why Russia's Military Strategy Could Collapse Any Day Now,' and the first comment (echoed by other comments) is 'BS You've been banging this drum for years.' There's something about Zeihan that doesn't smell right, but I can't put my finger on it. In a 2022 review of Zeihan's latest book, Michael Yon uses the words pretender, huckster and shill to describe Zeihan. In contrast, Triggernometry posted an interesting interview yesterday with Peter Theil, who cautiously demurred in response to questions requiring him to make predictions about the future. Given a choice between the two Peters, I'm going to vote for the latter.
Disproportional representation in the US Senate sucks, too, Ted. Especially with neither DC or PR being states. But I agree proportional representation in Parliaments probably make sense and RCV for Presidencies.
Dalrymple is smart to not make any specific suggestion to fix the constituency systems in any of those countries. I've been a political correspondent in several countries and I don't think there's a better system anywhere than the UK's (mirrored in countries as distant as Singapore and Malaysia) and you still had that result. History seems to want to tell us that one man, one vote is just not a stable arrangement, and we must look for something better.
An system intermediate between the current British local district first-past-the-post approach and pure nationalized "proportional representation" could have some merit. In particular one could implement a variety of plausible mechanisms that would put some kind of limit on the extreme kinds of delegitimating disproportionate discrepancies in votes-per-representative Dalrymple wrote about. For example if the discrepancy is greater than 2 to 1 in favor of X against Y, one could start reversing the result in the district with the next closest contest between X and Y and continuing to do so sequentially until the ratio falls back into acceptable / tolerable territory. I suspect the disproportion from the election result actually under- reports the genuine lack of representation, since many people who wanted to vote for Reform felt their vote would be wasted in their district and thus strategically voted for their second choice instead. A disproportionality-limit would give a lot more of those people more confidence that they could vote for who they wanted and their vote could still count for something and wouldn't be wasted.
“I blame public pension accounting—it always comes down to that. It violates the basic principles of finance by discounting liabilities at the expected rate of return of the invested assets.”
Theoretically, the liability ought to be valued at fair value, which is the price that an entity would pay to transfer that liability to an unrelated third party in a market transaction.
Clearly, using the expected rate of return on plan assets as the discount rate for the pension liability is not correct since no market participant would agree to assume the liability in exchange for a cash payment at such a high discount rate (i.e. low present value).
So, what are some reasonable alternatives? The implied rate for an annuity? Risk free rate?
Defined Benefit Pensions (and their healthcare equivalents) probably shouldn't exist. They only ever "work" as an intergenerational transfer when the young outnumber the old.
Everything should be a 401k and if you run out of money you run out of money. No mismatch.
We agree that they shouldn’t exist due to some Ponzi like qualities that are unavoidably embedded in the overall model. But they do in fact exist. So, given their existence, what is the most reasonable and prudent discount rate to use in valuing them at present value as of given date? 0% is not the correct answer nor is something as high as 10%.
There is no way to answer this question that doesn't adjust every asset for the latest best view of its risk and liquidity, something that cannot be done objectively without reference to market prices. Really the only answer is "skin in the game" and to align the interests of decision makers with the health of the funds they manage, and so to securitize the pension fund and pay them in shares of it (even require a large chunk of their personal savings to be in the form of those shares) discounted by their own stated discount rates. That will make those managers much more conservative with regard to rates, risk, and liquidity. Any time people have authority and don't face hard personal downside should there be significant negative fallout from their decisions down the line, you are going to see them put all kinds of timebombs in whatever system they control.
I'm not sure even that would work. Messing with discount rates, I gather, is part of how state and local government agencies plug holes in their operating budgets.
In the case of government pension obligations, which we are all on the hook for, I would posit a conservative discount rate. Say, ten year aggregate investment grade bonds. If the government wanted to make riskier investments and they paid off so be it, but it wouldn't be on the hook for such returns.
The "problem" is that governments wouldn't bother making exorbitant pension obligations if they had to fund at those rates.
For private pension funds (which are practically extinct) I would allow more latitude, but I would still wouldn't want them using whatever number a private equity person made up.
"Everything should be a 401k and if you run out of money you run out of money. "
If one includes Social Security, this is not a viable alternative but you hit on what is - guaranteed payments something like an annuity. "Profits" above and beyond the guarantee can go a variety of places, including as a non-guaranteed payment. Mutual insurance company annuities are typically are set up this way.
We have many potential Javier Mileis, but the voters aren’t listening to them.
Who are you thinking of as potential Mileis? I don't see anyone besides Vivek who would plausibly AFUERA any government departments.
I think if Milei himself were to run, he could win (or at least has a good shot). His policy would appeal to both elites (who believe more in markets) and non-elites (who love the generic idea of shutting down government departments), and his style is more entertaining than Trump -- bombastic & superlative with more props. It seems like a successful formula and if I were a politician I would attempt to emulate it.
As long as the politicians relay on bread and circus policies, the voters (at least a very large percentage) will shun anything that subverts policies supporting the entrenched philosophy of "comfort at all cost."
The politicians are listening to their donors (the most important people who also run most of society's important institutions) and secondarily to their constituents. Their constituents generally want free government money, infinite pills, and infinite surgery without wanting to work. They also do not want to do any duties for the government or to be subject to conscription. That is the true bipartisan popular consensus. If you try to tell them that there is no magic money tree they will look at you like you are Hitler with devil horns.
The only thing that might force a reckoning is major military defeat or the central banks Trussing governments repeatedly until they do as instructed. We are going into a world in which the modal citizen is basically going to the doctor all day long on the back of their government checks. Nothing in history or archeology has uncovered a society that runs on similar principles in which a small class of laborers and artisans works all day to support a massive number of methuselahs getting angry at Facebook, so we will see how the experiment works out.
This has been the "philosophical" norm in the American West for a long time: "hostile-yet-dependent" as writer Frederick Swanson points out in a thorough treatment of Utah's public lands, referencing Bernard DeVoto's (famous? forgotten?) essay "The West against Itself".
"Similarly, in France, the far-right party had a much lower seats/vote ratio than the left-wing coalition. This is not conducive to the public buying into the electoral outcome."
I'm more than a little perplexed why this is a problem. I'd be more worried if the minority vote-getters had more than proportional representation. Are you also concerned the libertarian party gets a couple percent of the vote but no representation?
It's funny how each side is concerned about "unfairness" that harms them more. Democrats often talk about the unfairness of the electoral college that favors small Republican states. Does that concern you too?
I don’t have an opinion about European parliamentary democracy except to be grateful we at least keep to a calendar here, which is the last thing that stands between sanity and politics taking over our whole private lives. But I think what the blogger is talking about would still require elections? Whereas, getting rid of the EC would mean we no longer needed to hold elections outside of cities.
Disenfranchising the people who grow your food might not be such a winning idea. Unless a show of strength is the most important thing.
I was surprised Alison Schrager said that "food-at-home" has had near-zero inflation. That is the only food I eat, and that has not been my experience. However, as a pessimist, I am perfectly prepared to accept that there are other reasons for higher grocery prices and that they will only continue to increase.
I can also see that the big (only) grocery in my area is trying to push people away from cooking and toward buying all food in prepared packaged form. So that could be involved, I guess, particularly in their wanting maybe to decrease the delta between those options: cook, or walk out with a plastic container of food. But that's not how I shop.
Before an American Javier Milei, there will need to be a Cassandra Devine like in Christopher Buckley's "Boomsday"
"Outraged over the mounting Social Security debt, Cassandra Devine, a charismatic 29-year-old blogger and member of Generation Whatever, incites massive cultural warfare when she politely suggests that Baby Boomers be given government incentives to kill themselves by age 75. Her modest proposal catches fire with millions of citizens, chief among them "an ambitious senator seeking the presidency." With the help of Washington's greatest spin doctor, the blogger and the politician try to ride the issue of euthanasia for Boomers (called "transitioning") all the way to the White House, over the objections of the Religious Right, and of course, the Baby Boomers, who are deeply offended by demonstrations on the golf courses of their retirement resorts."
https://www.amazon.com/Boomsday-Christopher-Buckley-ebook/dp/B000PE0FDI
I hope that this English results lead you to ask for parlamentarianism and proportional representation in the US, a county as much in need of them as England or France.
https://forum.effectivealtruism.org/posts/uW77FSphM6yiMZTGg/why-not-parliamentarianism-book-by-tiago-ribeiro-dos-santos
Theodore Dalrymple is really a treasure. His lack of public profile (I have never once for instance seen him on TV though he was talked over by Jordan Peterson for ninety minutes on the latter's podcast) may be rather deliberate, but is extraordinary all the same given the quality of writing and quantity plus breadth of material. His old travelogues written under his real name (Anthony Daniels) are actually rather obscure now, but I can't think of a better chronicler of Britain's rot. If he was starting out today I suppose he'd need a Substack.
US deficits won’t stop increasing until the Dem Party opposes spending because of deficits. The Dem media for decades has been demonizing all responsible efforts to make a balanced budget, or even to reduce the growth of spending.
It will help if Republicans get a 60+ Senate majority, the Presidency, and a majority in Congress, which is plausible if they redirect govt spending to the three middle income quintiles, while reducing tax subsidies/exemptions to tax exempt edu orgs & NGOs who should be paying “their fair share”.
There also needs to be a crisis in Japan or Germany, France, or the UK, or Canada, which is a clear demonstration of 250% debt/gdp being unsustainable in the 21st century—some other rich country having big problems because of debt. China stumbling won’t teach that lesson.
Lack of crisis in Japan, since their 1989 crash, includes 35 years of huge deficits. How many years are needed before it looks like a
Pattern of Sustainable Govt Debt Increases?
The rich who got bailed out by Rep Bush43, plus Obama, are understandably supportive of govt spending that increases median wealth by 1% but top 1% wealth by 5 or 10%—“everybody’s getting richer” ( if they have a job).
Zeihan: I think it is pretty clear that with Trump you will get larger deficits, less merit based immigration and more protectionist trade policies than Harris (however inadequate she will be on these same policies). That's enough for me.
"Trump you will get larger deficits
In 2016 the deficit was $590B, lets use this as the baseline before Trump got there.
2017 was $670B or an addition $80B.
2018 was $780B or an addition $190B.
2019 was $980B or an addition $390B.
So Trump was responsible for $660B in marginal spending.
I'll give 2020 to both parties since the early COVID bills were bi-partisan, though I blame Democrats for COVID.
However, basically every spending bill since then has passed on a party line vote. Here are the deficits for
2021 $2,770B or $1,790 above final year Trump deficit
2022 $1,380B or $400B above
2023 $1,700B or $720 above
Marginal deficits of $2,910.
$2,910B > $660B.
As the saying goes, it is difficult to make predictions, especially about the future. What's Zeihan's track record? I reviewed his video on the start of the Ukrainian counter-offensive from a year ago, and it is full of wishful thinking about what the Ukrainian military might accomplish, and casts negative aspersions on the likely performance of the Russian military (suggesting that Russian conscripts have a propensity to 'cut and run'). How'd that work out? Today there is a Zeihan video titled 'Why Russia's Military Strategy Could Collapse Any Day Now,' and the first comment (echoed by other comments) is 'BS You've been banging this drum for years.' There's something about Zeihan that doesn't smell right, but I can't put my finger on it. In a 2022 review of Zeihan's latest book, Michael Yon uses the words pretender, huckster and shill to describe Zeihan. In contrast, Triggernometry posted an interesting interview yesterday with Peter Theil, who cautiously demurred in response to questions requiring him to make predictions about the future. Given a choice between the two Peters, I'm going to vote for the latter.
Disproportional representation in the US Senate sucks, too, Ted. Especially with neither DC or PR being states. But I agree proportional representation in Parliaments probably make sense and RCV for Presidencies.
"But the politicians are not listening. We need Javier Milei."
They never listen, nor does the permanent bureaucracy. Per Martin Armstrong, it has always been this way. They have to be physically removed.
Fortunately, this happening and will continue over the next several years. They have proven themselves hostile to our tech and banking elite's business interests, and have also been advancing social agendas hostile to their children. Tom Lluongo and Pete Quinones discussed this recently. https://tomluongo.me/2024/07/27/podcast-episode-185-pete-quinones-and-why-indifference-trumps-hostility/
Dalrymple is smart to not make any specific suggestion to fix the constituency systems in any of those countries. I've been a political correspondent in several countries and I don't think there's a better system anywhere than the UK's (mirrored in countries as distant as Singapore and Malaysia) and you still had that result. History seems to want to tell us that one man, one vote is just not a stable arrangement, and we must look for something better.
An system intermediate between the current British local district first-past-the-post approach and pure nationalized "proportional representation" could have some merit. In particular one could implement a variety of plausible mechanisms that would put some kind of limit on the extreme kinds of delegitimating disproportionate discrepancies in votes-per-representative Dalrymple wrote about. For example if the discrepancy is greater than 2 to 1 in favor of X against Y, one could start reversing the result in the district with the next closest contest between X and Y and continuing to do so sequentially until the ratio falls back into acceptable / tolerable territory. I suspect the disproportion from the election result actually under- reports the genuine lack of representation, since many people who wanted to vote for Reform felt their vote would be wasted in their district and thus strategically voted for their second choice instead. A disproportionality-limit would give a lot more of those people more confidence that they could vote for who they wanted and their vote could still count for something and wouldn't be wasted.
“I blame public pension accounting—it always comes down to that. It violates the basic principles of finance by discounting liabilities at the expected rate of return of the invested assets.”
Theoretically, the liability ought to be valued at fair value, which is the price that an entity would pay to transfer that liability to an unrelated third party in a market transaction.
Clearly, using the expected rate of return on plan assets as the discount rate for the pension liability is not correct since no market participant would agree to assume the liability in exchange for a cash payment at such a high discount rate (i.e. low present value).
So, what are some reasonable alternatives? The implied rate for an annuity? Risk free rate?
Defined Benefit Pensions (and their healthcare equivalents) probably shouldn't exist. They only ever "work" as an intergenerational transfer when the young outnumber the old.
Everything should be a 401k and if you run out of money you run out of money. No mismatch.
We agree that they shouldn’t exist due to some Ponzi like qualities that are unavoidably embedded in the overall model. But they do in fact exist. So, given their existence, what is the most reasonable and prudent discount rate to use in valuing them at present value as of given date? 0% is not the correct answer nor is something as high as 10%.
There is no way to answer this question that doesn't adjust every asset for the latest best view of its risk and liquidity, something that cannot be done objectively without reference to market prices. Really the only answer is "skin in the game" and to align the interests of decision makers with the health of the funds they manage, and so to securitize the pension fund and pay them in shares of it (even require a large chunk of their personal savings to be in the form of those shares) discounted by their own stated discount rates. That will make those managers much more conservative with regard to rates, risk, and liquidity. Any time people have authority and don't face hard personal downside should there be significant negative fallout from their decisions down the line, you are going to see them put all kinds of timebombs in whatever system they control.
I'm not sure even that would work. Messing with discount rates, I gather, is part of how state and local government agencies plug holes in their operating budgets.
In the case of government pension obligations, which we are all on the hook for, I would posit a conservative discount rate. Say, ten year aggregate investment grade bonds. If the government wanted to make riskier investments and they paid off so be it, but it wouldn't be on the hook for such returns.
The "problem" is that governments wouldn't bother making exorbitant pension obligations if they had to fund at those rates.
For private pension funds (which are practically extinct) I would allow more latitude, but I would still wouldn't want them using whatever number a private equity person made up.
"Everything should be a 401k and if you run out of money you run out of money. "
If one includes Social Security, this is not a viable alternative but you hit on what is - guaranteed payments something like an annuity. "Profits" above and beyond the guarantee can go a variety of places, including as a non-guaranteed payment. Mutual insurance company annuities are typically are set up this way.