Links to Consider, 8/4
John Cochrane wants a 0 percent inflation target; Tove K on plow agriculture and dowries; Bari Weiss talks with Peter Turchin; David Deming on fixing college admissions
The price level measures the value of money. We don’t shorten the meter 2% every year. Confidence in the long-run price level streamlines much economic, financial, and monetary activity. The corresponding low interest rates allow companies and banks to stay awash in liquidity at low cost. A commitment to repay debt without inflation also makes government borrowing easier in times of war, recession, or crisis.
Central banks and governments missed a golden opportunity in the zero-bound era. They should have embraced declining inflation, moved slowly to a zero-inflation target, and then moved gently to a price-level target.
I approve of the sentiment, but note that talking about the price level makes it sound like we have something that can be well defined and measurable without controversy. What we have in practice are indexes like the CPI, which is a weighted average of prices of various goods and services measured in idiosyncratic ways. Perhaps a commodity price index, using crude oil, copper, lumber, and such, would at least be something you could measure in a transparent way.
Scott Sumner says that he prefers a wage level target. Perhaps measures of average wages are more indicative of inflation than the existing price indexes. But the problem with a wage level target is that gets away from the idea of the dollar as a measuring stick, in which you try to keep its value constant: why would you set a target of 0 percent for wage increases?
Under a gold standard, the dollar just is some fraction of an ounce of gold. Under a broader commodity standard, you could just say that a dollar is by definition x amount of crude oil + y amount of copper + z amount of lumber, and so on.
You can’t define a dollar as 1/nth of a CPI or 1/nth of some average wage rate. You can set a target for the CPI or a target for average wages. But setting a target for a measuring stick is not the same as giving people a defined measuring stick. You could do that with a commodity standard.
As long as men can, they will employ women to do most of the hard and dirty work. As long as it is possible for a man to use martial prowess and social skills to amass a harem of wives who will sustain themselves and their children with their work, the men who focus on exactly that will win the evolutionary race. The men who peacefully focus on feeding the children they have with one woman will not be the most successful.
…eventually, societies somehow got more peaceful. Mortality became lower and the population increased. Which made land a scarce resource. Extensive hoe agriculture by women was no longer efficient enough to sustain children - it required too much land. In such an environment, men face a choice: See their children succumb or work harder themselves. Those who chose the latter became evolutionarily successful. Plowing with animals is hard work and requires the upper body strength of a man. But it gives more output from a given area. When land became scarce, the men who were prepared to work their limited amount of land themselves got more surviving children.
Along with other interesting speculations, the essay argues that: with hoe agriculture, women have a comparative advantage in farming and a man will pay parents a bride price for a woman; with plow agriculture, men have a comparative advantage in farming and parents of women pay a dowry to the parents of a man.
Bari Weiss talks with Peter Turchin, who says that things are tense because of
the overproduction of wealthy people in the United States. As more and more of them become players in politics, they drive up the price of getting into office. And more importantly, the more people are vying for these positions, the more people are going to be frustrated. They’re going to be losers. But humans don’t have to follow rules. This is the dark side of competition: if it’s too extreme, it creates conditions for people to start to break rules.
If I were an Ivy-Plus college president, I would strongly consider announcing a phased-in 10 percent expansion of class size, and I would pledge to allocate the newly created spots to low- and middle-income students.
He also would have the schools set minimum cut-offs based on objective measures, and then admit based on lottery. As you know, I am all for that.
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I disagree with Weiss: many state legislative roles are surprisingly cheap, but with the caveat that they have no real power other than to steer state budgets that are largely concerned with administering federal programs or otherwise maintaining programs that are greatly shaped by federal frameworks (like roads, education, welfare, and utilities). Federal house seats are also surprisingly cheap to the point to which many people who COULD easily raise the funds to buy them do not bother. Senate seats are also inexpensive in many states relative to how much many potential candidates could muster. However, as Bridgewater founder Ray Dalio wrote in his recent book, no one who is sane wants those offices because of the corrosive impact on reputation among other things.
There are lots of issues with the US, but I think the best way to analyze it is through the lens of Bageshot, who wrote about the decay of the House of Lords and the emergence of Parliament in "The English Constitution" around the time of the end of the Civil War here in the US. Both houses of Congress have basically retired themselves from actual importance, and most of the debate that once happened in Congress instead happens in opaque realms of corporate, regulatory and legal debate or direct conflict.
So if you want to have an impact on foreign policy, you go to work for a think tank -- you do not write your congressman, who just takes orders from the think tank. If you want to have an impact on environmental regulation, you join a lobbying firm, you go to work for a powerful law firm, and you do rotations in federal agencies. The kinds of recondite and learned debates that once happened in the legislature do not happen anymore and the public does not have a seat at the discussions that do occur. The moment the masses get the right to vote is also the moment when the power of that vote dissipates into nothing.
>"If I were an Ivy-Plus college president, I would strongly consider announcing a phased-in 10 percent expansion of class size, and I would pledge to allocate the newly created spots to low- and middle-income students."
This is a charming statement, and explains why David Deming is not the president of an elite university. Most of the value of the elite university is its prestige. Its prestige comes directly from its exclusivity. It might be good for society to allow more students into elite universities, but it wouldn't be good for the people running these universities.