Suicide Of The West

Jonah Goldberg’s Suicide Of The West is a book everybody should read.  It is not a great book but it has parts that are absolutely awesome and is full of thought provoking moments.

The best part is the discussion of what Jonah calls The Miracle and Deirdre McCloskey calls the Great Enrichment.  On titles, we’re with Deirdre but we will use Jonah’s here.  Jonah does a great job of explaining the extent of The Miracle.  We love his “most important “hockey stick” chart in all of human history” on page eight.  It shows actual global GDP over the last two thousand years and we get a hockey stick.  He doesn’t limit himself to one method of teaching so everyone should get it.

Sidebar: We thought of saying that everyone should be required to read Jonah’s introduction and appendix but we can’t count on everyone’s sense of humor.  Everyone should read it but we are not into coercion.  End Sidebar

Jonah’s book’s appendix has a nice summary of his four core arguments which we have abridged even more here:

The Miracle has caused us to be unnaturally prosperous
We stumbled into The Miracle and we can stumble out
Human nature is fundamentally unchanging
Human nature can overpower the institutions that make prosperity possible

We agree.  We are fans of the growth fairy so we would add (and think that Jonah agrees based on the last argument) that we now have the knowledge to make prosperity more likely.  We think that Jonah would say that our romantic side, the feelings of human nature, cause the conflict that might end prosperity.

Part of his stumble out argument is that we got The Miracle by argument and rhetoric and we can lose it the same way.  Here Jonah cites Deirdre’s article above.  We love both of them and especially Deirdre’s Rhetoric of Economics.  It was a light from above in our understanding the intellectual differences between economics and accounting.  When Deirdre finds rhetoric for the second time it is less convincing to us.

The conflict of the book is the the rationality of the discussion of economics and human nature and Jonah’s feelings towards The Donald.  Jonah despises The Donald because he has brought tribalism to the right.  With an already tribal left then there is little to do but despair for The Miracle because corruption will set in and capitalism will become ineffective.

In summary, we were beyond delighted that somebody made such a beautiful and sincere argument for capitalism.  Jonah hasn’t convinced us to share his pessimism but we are concerned.  It is an important book that you should read but it is not a great book.

 

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Measuring Inflation

There is a problem with measuring inflation as technological change continues to accelerate.  Andy Kessler at the WSJ gives us a couple of examples of the problem of measuring inflation over time when products didn’t exist at the start of the period. He uses the examples of automatic emergency breaking on cars and cell phones that were not available in the seventies.  He could have compared our 19 inch TV that weighted 80 pounds (a guess) and was called a portable.

He doesn’t tell us how he made the estimate but he has a reasonable argument that the Consumer Price Index (CPI) overstates inflation over a time frame that is long enough to encompass technological change.  He comes to an extreme answer:

Freezing today’s lifestyle and going backward, I estimate a “true” median income of $347 in 1973 against the $51,640 of 2016. Today’s middle class isn’t hollowed-out. It’s living high on the hog.

That’s right, Andy is telling us that income went up by 14,785% rather than down by 4%.   We need to see more data to be convinced that Andy is close but we remember the seventies.  Cell phones, Internet, tablets, and personal computers did not exist.  Vinyl is still great but we have more audio options now.  TV is incomprehensibly better on both our sets and the ability to record images.  The difference in watching sports on TV is astounding.  We think he is right about the direction of the adjustment if not the extent of it.

Sidebar: We have been reading Sue Grafton’s mystery series that start in 1982.  We are up to one published in 1993.  The heroine still has to use pay phones to communicate at critical times.  A brief review: The Kinsey Millhone series is like a TV show.  You must read them in order and you’ve got to get to J to be able to evaluate the series.  End Sidebar.

Andy is on to something on the CPI.  It is a big deal.  We make policy on it.  Is the middle class hollowed out?  We make payments like Social Security based on it.  We adjust tax brackets based on it.  We need some one handed economists.

 

Great Terminology

The great terminology is not Intellectual Dark Web even though it is a useful term.  It comes from Holman W. Jenkins, jr. at WSJ.  He says:

Careers like Mr. Cuomo’s are built on running down what might be called “good policy” political capital. Mr. Cuomo is using up the state’s margin of energy survival to burnish his green potentials. He is sacrificing upstate’s economy to burnish his green credentials.

We agree.  Later Holman says:

This is the good-policy capital buffer at work. Mr. Cuomo is doing statewide what Mayor David Dinkins did for New York City in the early 1990s, using up the buffer. [Emphasis added]

Well said.  We think the term we have bolded, good-policy capital buffer, is great.  It fits with our conception of the growth fairy.  When you engage in good policy you feed the growth fairy and when you engage in bad policy you starve the growth fairy.  A great example of bad policy was the Obama requirement to raise MPG standards (CAFE) to 54.5.  Interestingly, the Washington Post called it uncontroversial.  Foolish would have been kind.  Fortunately, The Donald and friends have been undoing Obama’s handiwork.  The linked author is not happy but you should be.  The connection is not always instantaneous but it gives a buffer to all the anti-growth things that governments do.  Let’s call it the good-policy capital buffer in the future.