Links to Consider

Stephen Miran on crowding out; Jerry Muller on Conservatism; Wealth in America; David Brooks on politics and personal needs; Noah Smith on extraction economies

Stephen Miran writes,

Venture capital funding fell 35 percent in 2022 from the year before—a larger drop than took place after the Global Financial Crisis—thus halving the investment in start-ups. According to data from Bloomberg, total year-to-date investment-grade bond issuance in the U.S. is down $19 billion from last year, despite nominal GDP growth of 6 percent over a year ago. And home mortgage applications are at their lowest level since 1995, though the economy roughly doubled over this time.

Redirecting credit toward government-sponsored activity while starving parts of the private sector will have long-term consequences.

Jerry Muller writes,

The conservative defends existing institutions because their very existence creates a presumption that they have served some useful function, because eliminating them may lead to harmful, unintended consequences, or because the veneration which attaches to institutions that have existed over time makes them potentially usable for new purposes…

While liberals typically view with suspicion the restraints and penalties imposed upon the individual by institutions, conservatives are disposed to protect the authority and legitimacy of existing institutions because they believe human society cannot flourish without them. ..

Conservative theorists repeatedly decry the application to society and politics of a mode of thought which they characterize as overly abstract, rationalistic, and removed from experience. ...They oppose what they regard as epistemologically pretentious forms of knowledge and analysis…

The radical conservative shares some of the concerns of more conventional conservatism, such as the need for institutional authority and continuity with the past. But he believes that the processes characteristic of modernity have destroyed the valuable legacy of the past for the present, so that a restoration of the purported virtues of the past demands radical or revolutionary action.

These are a few excerpts from his introduction to a book of essays by various authors representing conservative thought.

Both the WSJ and Noah Smith took note of the latest survey of consumer finances in America. For the WSJ, Josh Zumbrun writes,

Last week the Federal Reserve revealed that last year the average net worth of American families topped $1 million for the first time, surging 42% from $749,000 in 2019. 

…while the level of median wealth was much lower than the average, it actually rose more than the average between 2019 and 2022—by 37%, adjusted for inflation—to $193,000.

…About 16 million American families—just over 12%—have wealth exceeding $1 million, up from 9.8 million families in 2019. 

When I taught statistics in high school, I used to explain the difference between mean and median by saying that if Bill Gates moved into your neighborhood, the mean wealth would go up by a lot, but the median wealth would only go up by a little.

Noah Smith writes,

In 2019, the typical household in the bottom 25% had a net worth of only $400, which increased to $3500 in 2022. That’s still a very low level of wealth. But remember, it’s a net number — the people without much wealth in the U.S. often have a lot of debt, which cancels out the assets they own.

And a big reason that the wealth of the bottom 25% went up so much is that Americans are slowly getting out of debt. The debt-to-income ratio has fallen pretty steadily since 2010

I would say that one of the reasons household wealth did so well in the last three years is that the government created a lot of artificial wealth by running huge deficits. If you took the increase in government debt and assigned it to households, how much of the increase in household wealth would go away? And if some of the runup in stock prices and house prices turns out to be unsustainable?

Speaking with Yascha Mounk, David Brooks says,

lonely and socially ill societies have the politics of recognition. Everybody's hungry to be affirmed. They're hungry for heroes who will shame and humiliate the other side. And so politics seems to offer them a moral landscape. Recognition-politik seems to offer a sense of moral action: I do good not when I sit with a widow or feed the hungry, I do good when I hate the other side or when I'm infuriated about the other side. 

I see this trend at work in non-profits. If a non-profit wants to feed the hungry, I’m fine with it. But the non-profit with a cause drives me beserk.

Noah Smith writes,

economic theory gives us a clear reason why manufacturing-based economies should grow faster than resource-based ones: productivity. There’s lots of scope to improve the productivity of manufacturing, especially if you’re not near the frontier yet. But there’s just not much scope to improve the productivity of resource extraction (especially because the extraction is often done by foreign companies whose technology is already cutting-edge).

And that is even before you get to the “resource curse,” which is that government in resource-extraction economies tends to be oriented toward stealing and redistributing wealth rather than encouraging wealth creation.

substacks referenced above:

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Does the notion of a "Global South" still make any sense?

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David Brooks on Knowing Others (and Ourselves)

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Great news about American wealth