The Case Against Inflation

Many pundits suggest--with varying degrees of conviction--that we're headed for a bout of inflation. They do have a point. Prices are obviously going up--the May CPI print was up 5.2%. But this is often seen as a one-shot response to the end of the pandemic, as supply chains readjust and changed consumer preferences are accommodated. Inflation, properly understood, is more than a once-off jump in prices--the Fed terms this as transitory--but instead a continuous escalation over an extended period of time.

The case for genuine inflation beyond the transitory rests on the "printing money" argument. Peter Schiff is the loudest exemplar of this school, where he basically channels his inner Milton Friedman: 

Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.

The Treasury is issuing too many bonds, and the Fed is printing too much money to buy them, effectively monetizing the Federal debt. Interest rates are being kept arbitrarily low, and the result has to be sustained inflation.

A more subtle and sophisticated version of this analysis comes from two leading economists: John Cochrane and Arnold Kling. I very much enjoyed a lecture by Mr. Cochrane, and I learned much from a subsequent explication by Mr. Kling. Together they have dented my faith in the long-term secular trend toward deflation. They both make compelling arguments which I feel unqualified to summarize--so I encourage you to attend to those original sources.

Still--I'm gonna argue for deflation, or at least disinflation. Let me count three reasons.

1. Fundamentals: These include demographics (declining and aging populations), technology (automation), and globalization (more efficient supply chains). I believe this is deflationary--but of course I'm ignoring Mr. Friedman's dictum. If inflation really is only about money, then the fundamentals don't matter.

2. History: Large deficits have not yet resulted in inflation. Japan has been running huge deficits for decades, and they're in a seemingly permanent deflation cycle. The (then) huge deficits the US incurred in 2008-9 did not lead to inflation--again quite the contrary. Europe has experienced the same phenomenon. Perhaps you'd have to go back to the end of WWII to find a counter-example.

At very least, the empirical result is that government deficits don't inevitably lead to inflation. In fact, they seem deflationary. One can always argue that "this time it's different," and maybe it is. But don't count on it.

I have no obvious explanation for these empirical facts, but somehow Mr. Friedman is wrong.

3. Supply and demand: There is clearly a market for money--a subject which I now realize I know nearly nothing about. (I have pre-ordered Scott Sumner's book The Money Illusion. I'm hoping that provides me with an introduction. Mr. Sumner is a good writer.) Obviously the money market depends on total output and interest rates. It must also depend on how one defines money. Misters Cochrane and Kling define it very broadly.

But there is a money market, which has to be approximately the same thing as a liquidity market, which depends on a bunch of things that I don't understand very well. So I can't give you a coherent, analytical explanation, but I can tell you a story. It's cartoonish, it's fiction, and it takes place in the near future, perhaps a year or two from now. I hope it captures some basic ideas.

I'm a really lucky guy. No, I didn't win the lottery, but it's almost as good. Between the CARES act, the first stimmy check, my proceeds from the Human Infrastructure Bill, the second and third stimmy checks, the very generous Fund to Stimulate Retired College Professors Act, along with the fourth stimmy--with all that I managed to put together a million dollar stake. I went condo shopping in Miami Beach.

I paid for it in "cash"--actually a certified check for a million bucks. The seller turned out to be an old lady named Louise. She was too frail to be living alone and planned to move in with her daughter's family in Ft. Lauderdale. Louise didn't trust the stock market, and she'd never heard of bitcoin, so she took her check and marched down to the local bank and deposited it. The teller did her job--the check was endorsed, scanned and put in a bin with the five other paper checks that had come in that day.

But the bank manager--Elmer--was royally pissed. A $1MM deposit shows up as a liability on his books, and unless he could turn that into a moneymaking asset it would impair his bank's profitability. It might even hurt him with regulators, who may insist that he raise additional capital.

There were other issues besides. Some other customers (people less fortunate than me) were using their stimmy checks to pay off their credit cards and to pay down mortgages. There was so much money floating around that nobody wanted to borrow anymore. Last month Elmer only got one application for a new credit card--it came from Tom, who had a FICO score of 350. Not worth more than a $1,000 credit line, but better than nothing.

Elmer needed that million bucks like he needed a hole in the head.

A short term solution was the reverse repo window at the Fed. There Elmer could buy a T-bill in exchange for cash, on which he would collect some tiny rate of interest. It got rid of the cash--but only overnight. The next morning he'd have to return the T-bill and take the cash back (now with interest). Yeah, he could repeat this night after night, but that gets old real quick.

Then he could try to buy mortgages from other banks. This is a version of the "hot potato" problem, where banks try to cajole/fool/cheat their competitors into taking cash off their hands. The problem is there weren't very many mortgages for sale (folks like me were paying cash for houses), and no bank wanted to sell them because, like Elmer, the last thing they wanted was cash.

If something doesn't happen quick, then disaster will strike. Eventually the checks will clear, the funds will settle, and Wall Street will grind its way to the inevitable conclusion. Disaster will arrive at Elmer's bank in the form of a Brinks Armored Truck loaded with 10,000 fresh, clean, sequentially-numbered, just-printed $100 bills--straight from the Fed.

If Elmer couldn't even dispose of a million bucks in electronic format, just what was he gonna do with the actual, physical bills? They'd just sit in his vault, pose a serious security risk, and gradually decay from the elements (even in a climate-controlled safe). His Board of Trustees would never forgive him.

Fortunately, at the last minute the Fed came to Elmer's rescue. They offered to pay interest on excess reserves. OK--it was only 0.000001%--but that's infinitely better than the disaster scenario. So that's where the money went--back from whence it came--the Fed's vaults.

And there it will sit, indefinitely--or at least until the computer bugs eat all the hard drives and everything is forgotten in the mists of time.

Please tell me where you find inflation in this picture?

Further Reading:

• Peak Bitcoin?
• Book Review: The Future of Higher Education
• Louis Proyect and the More-Poverty Solution

Trotskyists on the Pandemic

My Trotskyist friends have all opined on the coronavirus crisis. And well they should, because finally they have something that might actually rise to the level of a "crisis," unlike all the other mythological "crises" they have previously invented (climate, education, decline in living standards, etc.).

Never let a good crisis go to waste.

Here is a brief review of relevant articles. Let's begin with the Statement By Socialist Resurgence  (SR), which sums up everything wrong with Trotskyist economics.

Slowing down the initial spread of COVID would have meant paying for massive testing campaigns in every country as soon as the virus was identified in China. In itself, this act would have meant large payments for doctors and equipment, not to mention the inevitable slowdowns in production as workers test positive and choose to self-quarantine. A rational response to the virus means workers and their dependents must not engage in productive activity while also being sustained in all of the necessities of life.

Consider the last sentence: workers and dependents must not engage in productive activity. Presumably "workers and dependents" include people employed by grocery stores, pharmacies, delivery services, not to mention farmers, tractor mechanics, grain haulers, meat packers, etc. None of those people can go to work. Yet everybody is gonna get free food? How?

Further, doctors (who presumably are also banned from working) are now supposed to provide "free" healthcare. I assume that means they're supposed to work for free, like they do in Cuba. At very best they'll get paid in little green pieces of paper--with which they'll be able to buy nothing at all because nobody else will be producing anything.

The ridiculous assumption is that the "bourgeoisie" have some huge stash of food held in reserve that they can now personally distribute to the working class. Imagine Bill Gates riding a bicycle delivering pizzas.

This is the free unicorn theory of economics. It makes no sense.

SR can't help but resurrect old eco-wheezes, blaming the virus on: deforestation and forest fires; global trade, especially with more remote areas; industry reaching deep into hitherto untouched forest uncovering disease-ridden animals ready to transmit to humans (a silly thesis); the stock market. Ultimately, they blame civilization--we should all return to some primitive hunter-gatherer existence when everybody was happy and life expectancy was 32 years.

The truth is that Covid-19 originated in a live-animal market in Wuhan. Or, for the more conspiracy-minded, it was caused (probably inadvertently) by an escaped virus from a nearby research lab. None of this has anything to do with forest fires.

James Fortin, in an article in Socialist Action (SA), is absolutely obsessed with Donald J. Trump. In his imagination the spread of the virus was caused by: Trump refusing to implement the Defense Production Act; Trump suggesting that "WE CANNOT LET THE CURE BE WORSE THAN THE PROBLEM ITSELF" (caps in Fortin's original); Trump disobeying his own medical advisers; Trump personally responsible for denying masks and PPE to healthcare workers; Trump originally underestimating the seriousness of the disease; and last but not least, Trump wanting the stock market to go up.

If only Hillary had been elected president! The world would just be so much better!!

Like SR’s piece, an article by Roy Landerson in The Militant concentrates on economic issues, albeit much more intelligently. Mr. Landerson (who I believe is a pseudonym for Brian Williams) is a competent economics reporter. The problem with being competent is that it becomes impossible to issue the radical-sounding but ultimately really stupid demands. Accordingly The Militant comes across as veritably reformist. They're not really--they're just sane.

A key graf:

In the U.S. and around the world, the capitalist rulers are trying to stem the virus tide by shutting down much of the economy and globalized world production and trade, apart from “essential” industries and services. Borders have been closed, lockdowns and curfews imposed in ever more far-reaching fashion. As the social dislocation for hundreds of millions of working people increase, so too will attacks on our rights and political space.

Mr. Landerson's account is much more specific about what has and has not been shut down. Further, he never criticizes the principle behind the closures--namely to prevent the spread of the virus. His final sentence also rings true, albeit he uses weird, SWP language to express it.

Attacks on "our rights and political space" supposedly refers only to the working class, but really it affects everybody--especially academics and journalists. The warning is echoed by many others, including the prominent libertarian, Arnold Kling, who suggests that once governments obtain power, they are reluctant ever to concede it. I'm sympathetic to Mr. Kling's and The Militant's concern.

Mr. Landerson is alone on my list who mentions the other principle reason for economic distress.

An additional external shock, in the midst of this crisis, is the collapse of the crude oil production quotas and price fixing deal between the rulers of Saudi Arabia and Russia. This caused a glut amid falling demand and already plummeting prices. Low prices will hit highly indebted U.S. shale oil producers hard as well as the budgets of governments dependent on oil exports like Venezuela, Nigeria and Iran.

The US used to be a net energy importer, which means that falling oil prices were an unalloyed blessing to our economy. But now we're a net exporter and the shoe is on the other foot. The benefit to the American consumer (which given the lockdown they can't avail themselves of) are outweighed by the collapse in energy sector employment.

The Militant's sober analysis of the crisis leads to a sober list of demands, most of which have already been met by the government.

• They demand "emergency relief for the working class" and others, such as farmers and shop owners. The $1200 checks issued to each adult meets this request.
• They ask that the government build emergency hospitals--now being done in New York at the Javits Center and in Central Park, along with a hospital ship. Similar efforts are underway elsewhere.
• They request "weekly unemployment relief that working people can depend on — not just a one-time check in the mail that falls far short of what is needed." Indeed, unemployment benefits have been juiced by $600/week, and extended to 39 weeks.
• They want a "government-funded public works program to put millions to work at union-scale wages." In government they call that an "infrastructure bill," and it does look like it's coming. I oppose it because I think it's mostly wasteful pork.
• Finally, they want "a crash government program to greatly expand the resources to produce a coronavirus vaccine." I think that's happening. The problem with vaccines is they have to be proven both safe and effective, which takes time. No amount of money will make that time any shorter.

Two of the SWP's demands are out of sync with the public's. First, they want emergency and unemployment benefits to be extended to illegal immigrants. This is a political nonstarter. 

And second, they want the Federal government to take over the production and distribution of essential supplies. For some reason they think that the government will be better at logistics than Walmart or Amazon!? The government--which ordered hospitals to use virus tests that didn't work; that couldn't get the Obamacare webpages to work; which allows the military to buy hammers at a thousand dollars each; which can't get the 737-Max plane back in the air--that government is now supposed to be given a monopoly on essential medical supplies.

No thank you!

Finally, let me link to a wonderful article by Louis Proyect. It's not really political, but instead is a beautifully written memoir of what it's like to be a septuagenarian in New York City during a pandemic.

Further Reading:

• Socialist Resurgence Demands Steep Wage Cuts for Healthcare Workers
• Book Review: Kim Jong Un
• The SWP Defends Civilization

What Determines Political Opinion?

The conceit of this blog is that my arguments are so compelling and my writing of such spectacular quality that the scales shall inevitably fall from my former comrades' eyes and they'll all become Republican Trump supporters.

Of course that almost never happens. People rarely change their political opinions because of argument, spectacular or otherwise.

So what determines people's political opinions? There are several points of view.

The first may be called Marxian. It maintains that politics derives from economics, and a person's political opinions will roughly follow their economic status. In the narrowly Marxist sense this reduces to bourgeois, petty-bourgeois, and proletarian sympathies. As this blog has relentlessly pointed out, that taxonomy no longer fits the modern world very well.

The larger Marxian premise is alive and well, however. It's shows up in simple-minded form in the MSM as blue-collar voters elected Trump. A more sophisticated, Marxian perspective is proposed by Joel Kotkin, author of the recently released The New Class Conflict (which I have not yet read). It is summarized in an important article here.

In Kotkin's view, US society exists in four classes: the Oligarchy, the Clerisy, the Yeomanry, and the Serfs. The oligarchs are the top 0.1% of our society--roughly equivalent to the bourgeoisie. The clerisy are "made up of academics, the media and well-paid professionals — represent[ing] some 15 percent of the American workforce." The yeomanry represent "small business and property owners." I'd suggest it constitutes most Americans with a positive net worth. Bringing up the rear are the serfs--people who are too poor to accumulate any wealth at all, or who have smothered themselves  debt that they'll never be able to pay off.

That all sounds very clear, and it has considerable explanatory power. But it falls apart when I try to apply it to myself, my family, friends and colleagues. Am I a member of the clerisy? After all, I retired as a professor at full rank, making me an academic in good standing. But I retired from Two-Bit State College--not Harvard. How far down in the academic pecking order can one get and still be a cleric in good standing?

Unlike most of my colleagues, I retired on a 401K rather than with a state pension. That means I have a lot more money than they do--if I can't rise to clerical status I'm definitely a yeoman. My retired colleagues, while they have much less money, do get a state pension--which politically isn't much different from a welfare check. Are they clerics, yeomen, or serfs? (Or are retired folks declassed altogether, as a traditional Marxist might maintain?)

And so on. It all dissolves into ambiguity. And none of this predicts my vote or that of anybody in my family. Maybe we're just special--but I don't think so.

A second explanation for political opinion is that it is a personality trait. A leading exponent of this model is Arnold Kling, author of The Three Languages of Politics. My review (here) briefly summarizes the thesis:

Kling suggests that there are three political ideologies in America, which he roughly labels as Progressive, Conservative and Libertarian. These three groups use different languages--that Kling calls heuristics--and from this he derives a three-axis model. Progressives organize ideas around an oppressor/oppressed axis. Hence they are primarily interested in social justice, and in righting historical wrongs. Conservatives think in terms of a civilization/barbarism axis. Accordingly they emphasize stable institutions (church, family, law), and tend to resist sudden changes. Finally, Libertarians orient according to a freedom/coercion axis. They're worried about big government, too much taxation, gun control, and too much environmental regulation.

How one aligns along the three axes (I'm halfway between the conservative and libertarian) is personality trait. Given that the adult personality is roughly 50% genetic and 50% random chance, a person's political opinions are substantially inherited and in any case unchangeable in adulthood--at least in terms of basic priors as summarized by the three-axes model.

This, of course, contradicts Kotkin's Marxian view--neither clerics nor yeomen share a common set of personality genes. It also means that political conversation is mostly a waste of time--we'll always be talking past each other no matter what we do.

The third model is group affiliation. A core human desire is to be part of a group, to have a reliable set of kin and friends who will stand with each other through thick and thin. People thus go to great lengths to demonstrate their allegiance to the group. Religious practice is a common example. The devout parishioner visibly demonstrates his loyalty to the group, proving that he can be trusted no matter what.

Some groups demand not a religious faith, but rather a shared set of political principles. The academy is an obvious example. To be a member in good standing of the academic club you have to hold reliably Progressive opinions. It doesn't matter what your genotype is, nor is any randomness in your background a factor. Absent vocal progressivism your chances at getting an academic job, much less acquiring funding and tenure, shrink dramatically. Accordingly academics are ostentatiously Woke and aggressively Green.

A lot of this is self-selection. People who aren't Woke or Green often shy away from academic careers. Though some of my colleagues are nowhere near as committed to those principles in private as they are in public. In many cases they're just not interested in politics at all and only go through the PC motions. Others (like me) are actual Conservatives, and mostly we just keep our mouths shut.

Nevertheless, group affiliation explains why the academy is so relentlessly Leftist. To a lesser degree the same is true of school teachers and civil servants. On the other side, some religions also impose a political dogma on their adherents--they will often be Conservative.

The fourth and last possible determinant of political opinion is identity politics. It maintains that people of a given ethnicity share common genes, culture and/or experiences, and thus will share common politics. The Progressive version of this story has become cartoonish, but I have succumbed to it myself. Since reading Albion's Seed, I have been seeing Yankee, Quaker, and Scots-Irish influences everywhere. (See my review of Colin Woodard's book here.)

While Progressives say they subscribe to Identity politics, what they really mean is a form of group affiliation. The latter easily explains why academics vote 90% for Democrats. African-Americans also vote overwhelmingly Democratic. Progressives claim this is because of their unique genetic/cultural heritage, i.e., their identity. Though it is a stretch to think that African-Americans are so uniform in genotype and culture. Of course they're not, but voting Democratic has become a cultural touchstone--you're not genuinely African-American if you can't toe the line.

Congresswoman Ayanna Pressley recently put it very well. She said "we don't need Black faces that don't wanna be a Black voice." She's not playing identity politics, but rather trying to enforce group affiliation.

It won't work. Unlike academics, Blacks are not self-selected. They were born into an ethnic culture. That culture is much more heterogeneous than Ms. Pressley will have us believe. I think the days when Democrats can simply take the African-American vote for granted are coming to an end.

None of these models are mutually exclusive, and all of them describe some aspects of reality. Surely people respond to economic stimuli. For example, teachers vote to pass school budgets. But to suggest that blue collar workers voted for Trump for economic reasons stretches credulity. For that phenomenon group affiliation is a better predictor. Likewise, identity politics might have some merit--there really are many Americans of Scots-Irish descent, and they often vote similarly. But to think they'll vote as a solid block is to overstate the case.

While I'll give much credit to all of these models, I still think they're incomplete. It's a quaint thought, but I do believe people have free will. Its remit is pretty small, but it's still there. It means that ornery, unpredictable, thoughtful people still can change their minds independently of money, genes, or culture.

So there is reason for me to write my blog after all.

Further Reading:

• Heather Bradford on Abortion
• Against The Current Celebrates 200 Issues
• Henry Giroux Defends the Faculty Guild

Arnold Kling's Moonshot

I'm a great Arnold Kling fan--I've favorably reviewed two of his books on this blog (here & here). I follow his blog daily--it's one of my favorite reads. Mostly I agree with him. But I have to take issue with his post from a few days ago, entitled A Moonshot to Overthrow Neoclassical Economics, along with the similarly titled article, here.

A moonshot is the Big Thing that a person wants to accomplish in life. In other contexts it might be called a vision statement, or a passion. Though a moonshot is typically much less practical than those--a goal for striving rather than achieving. Mr. Kling's moonshot is "to be a leader in overthrowing neoclassical economics. A better approach would focus on mental-cultural factors and rapid evolution."

I think he gives neoclassical economics a bum rap.

In his account (and I don't disagree) neoclassics begins with two "essential propositions":

1) Production is a process that employs two primary factors--labor and capital. 

2) The distribution of returns to labor and capital reflects their respective contributions to the production process.

He notes that Marxists disagree with the second axiom--they believe capital steals a disproportionate share of the proceeds--and he acknowledges they might be right. But that, in his view, is quibbling over a detail. Mr. Kling's critique is much more damning--he denies the validity of the first premise.

Instead a third axiom must be included:

[Y]ou have to pay attention to what people believe. What they believe affects what they value, what they think constitutes a good investment, what conduct they believe is appropriate when buying and selling, how they interact in their work environment, and so on.

Mr. Kling says that culture matters. In a slightly different context others insist that institutions matter. And of course they do--does anybody deny that? Indeed, Paul Romer took the idea to the nth degree and attempted to build a city de novo in the Honduran jungle, endowed from the beginning with good institutions. I don't think that worked out very well.

My old professor in general chemistry (Norman Nachtrieb--now deceased) told us that "science is the art of successful approximation." Ideal gas law is valid as long as intermolecular forces are assumed to be negligible. A step in an engine cycle is adiabatic as long as no appreciable heat escapes into the environment. The words "negligible" and "appreciable" are purposely left vague, and depend on how precise an answer one actually needs in the result.

Economists have a similar concept--ceteris paribus--which means all else equal. Put that phrase in front of anything an economist says and you've got the economic equivalent to "negligible" and "appreciable." Of course, what with economics involving humans rather than molecules, the approximations are much rougher and the degree of precision much less. Still, at least in this sense economics is just like chemistry--it is the art of successful approximation.

One common approximation is to limit the timeframe during which a result is expected to hold. At picosecond scales (light-matter interactions) almost everything is adiabatic. For long-lived radioactive decay processes (the uranium half-life is billions of years), nothing is adiabatic. Completely different approximations will apply in the two cases--indeed, they can't even talk to each other.

In that sense economists have it easy--economic timescales don't vary by 30 orders of magnitude--maybe only by four or five (from a few weeks to a few centuries). Still, timescales matter, and this is where Mr. Kling's analysis breaks down.

Implicit in neoclassical economics are those two, essential, prefatory words: ceteris paribus. The axioms are not divine writ, but only hold as long as everything else remains equal. Thus we'd expect the approximation to be successful only for a relatively short period of time. How long is that time? Do many people make economic forecasts beyond a year? Even the Fed doesn't dare estimate anything more than four or five years out--and they're roundly mocked when they do even that. Ten years is beyond anybody's ken--ceteris is no longer paribus (pardon my Latin).

And Mr. Kling knows that. He says that culture changes, and furthermore, evolves. He further claims that it's changing more quickly than before. And therefore the all else equal assumption is invalid at nearly any timescale. Of course that's wrong--it is certainly possible to predict many economic phenomena (interest rates, corporate profits, unemployment) on a quarterly or even annual basis. Those predictions (especially the short term ones) are right more often than not. Culture does not change that fast.

Contrary to Mr. Kling, I think culture changes are on a generational timescale--roughly 30 years. My children grew up in a different part of the country than I did, and their mother (my wife) is Filipina. So obviously they see the world differently from me (though there is also considerable continuity). But now that they're 30 years old (give or take), those attitudes are mostly baked into the cake. For the next 50 years their cultural expectations will not significantly change.

I think Mr. Kling is mistaken in his claim that cultural evolution is speeding up. It's not. We're talking 30-year timescales here, minimum. It may even be longer since life expectancy has gotten longer. Within that timeframe, for the few-years horizon of neoclassical economics the ceteris paribus approximation makes sense.

What is more rapidly changing is technology, often known as structural change. That's the way mainstream economists refer to something not being equal. And like physical scientists they treat it with fudge factors, as a perturbation from the original result. Obviously if the structural change is huge (the engine explodes), that's not a fair approximation. But in the real world structural change happens slowly--driverless cars aren't anticipated to be mainstream for another 30 years.

So, over the two or three year window during ceteris paribus, neoclassical economics is a good approximation. Or, as scientists working at a blackboard might put it, a good first approximation, for which more refined iteration may be indicated. Mr. Kling's criticism is valid, but only over longer timescales when the two axioms no longer hold.

Mr. Kling does have a legitimate complaint. Approximate models will never give you exact results. Calculating theoretical implications out to four significant digits is a waste of time. It's computer gaming. Many econometric models seem to me to fall under this category (though I'm not expert).

But economists are not alone in falling in love with their computers. Scientists suffer from the same disease--in our current day so-called "climate scientists" are extending models far beyond where they can reasonably be expected to hold.

Further Reading:

• The Lenin of Libertarianism
• Tradable vs. Non-Tradable Goods
• Book Review: The Complacent Class

The Demise of the Democratic Party

The demise of the Democratic Party? The claim is ambitious and I claim no certainty. Of course the Republican Party then has to change, too.

The symptoms of such a change are apparent. Political correctness--proudly inaugurated by we Trotskyists back in the early 70s--entered the American mainstream by the 1980s. But recently it has descended into parody, as illustrated by Mizzou and Yale, and also by the "rape culture" witch-hunt. Further, the environmental movement has gone off the rails, advocating ever more extreme policies that, if enacted, will impoverish billions of people. These are not positions of a thriving political movement.

Our argument starts with Arnold Kling's book describing the three axes of politics, which I reviewed and summarized here. Briefly, he claims that political discourse is organized around three poles: Progressives see the world as a tension between oppressor and oppressed; Conservatives defend civilization against barbarism, while Libertarians support freedom over coercion. In the current political alignment, Progressives are all Democrats, while Conservatives and Libertarians are uncomfortably joined in the Republican Party.

But it need not always be that way. To see why, note that Mr. Kling's label Progressive is misleading. Progressives look forward to a better world. They are building a future where there is no inequality, racism has been conquered, poverty is but a memory, and electric power comes from magical unicorns that leave no environmental footprint. Only the 1%, or perhaps the people with white male privilege, or the big corporations stand between us and a more humane world.

But there is another way to reach the same conclusion. Instead of a utopian future, what we really need to do is recover some golden age past. Do you remember those days when a guy with a high school education could get a good job at the factory? When there were uplifting shows on TV like Leave it to Beaver, or Father Knows Best. When the biggest decision in life was the choice between Ford and Chevy. Those were the days, my friend, and but for the 1%,  or the big corporations, or disruptive technology, or free trade with foreigners, we could go back to those halcyon days when we all lived happily ever after.

Believers in that last dream are commonly called conservatives (though they differ somewhat from Mr. Kling's description of Conservative), but the only real difference between them and Progressives is which direction they're looking. Progressives look forward to the future, while conservatives look back at the past. But at the end of the day they're both looking at the same thing, and regard the same people as enemies. Especially if you ditch the political correctness meme (which is happening in real time right before our eyes), then progressive and conservative close cousins under the skin.

The current exemplar of the conservative movement is Donald Trump. And lo and behold he's a long-time Democrat, a former close ally of that progressive, Hillary Clinton. So it is not written in stone that conservatives will always be allied with Libertarians. Quite the contrary, one sees a split in the Republican Party, with Trump, Cruz, and Carson on one side, and Paul, Bush, and Rubio on the other.

So I foresee a Janus-faced political party combining backward-looking conservatives on one side with forward-looking progressives on the other. There is tension between them, to be sure, but they both share the same enemies. Let's call them the Traditionalists. Traditionalists oppose free trade, are skeptical of immigration, support unions, support subsidies to important American firms such as GM and the Post Office, don't like Silicon Valley, and tend to be nativist. In addition to the above list, their ranks include Pat Buchanan (arguably the founder of the movement), Hillary Clinton, Bernie Sanders, Rick Santorum, Mike Huckabee, Matt Drudge, and Rush Limbaugh. Their constituency will be Blacks, Appalachians, and working-class whites. The coin of their realm will be a deep-seated grievance against the 1%, globalization, disruptive technology, and the New Normal.

Opposing the Traditionalists will be a Party I'll dub the Liberals, so named because they'll count among their members classical liberals such as Arnold Kling and me. But not just us. Other members will include Larry Summers, Paul Krugman, Bill McKibben, Bryan Caplan, and John Kerry. The Liberals will believe in free trade and open borders, along with the rule of law. They'll welcome new technology. Unlike the Traditionalists, they'll see the modern era as the best of times. Maybe it will get better in the future, but only if we stay the course.

Liberals will also be a coalition. While all of us will subscribe to capitalism and globalization, the Party will contain both Keynesians and Hayekians. Against the Traditionalists those differences are modest. Likewise, people who worry about global problems (e.g., Bill McKibben) will sign up as Liberals. The Liberals' constituency will include Silicon Valley, the professional class, new immigrants (e.g., most Hispanics and Asians), young people, and people who enjoy travel and interesting restaurants.

So lets consider specifically the fate of two subgroups: academics and Trotskyists.

Academics will split, though not evenly. The top of the profession--e.g., Larry Summers and Paul Krugman--will be Liberals. That's because they're winners in the winner-take-all competition, and they benefit directly from global marketplace for their ideas. I expect the famous people at the Ivies to be Liberals pretty much regardless of their current political affiliations. The internecine fight within the Liberal Party will be intense, but again, compared to the Traditionalists all differences will pale.

Most Academics--e.g., my colleagues at the local state college--will become Traditionalists. Their top priorities will be to preserve funding, tenure, and the prestige that comes from the title professor. All of these are at risk in the New Normal, threatened by both technology and globalization. 

Those faculty who staffed the barricades at Mizzou are part of the Traditionalist brigade, though they don't realize it yet. Everybody at the barricades--the faculty, the Black students, the white students--have a vested interest in the survival of the university as an institution. They will need allies in its defense. Their natural allies are other people in the same predicament, i.e., people whose jobs are being automated or globalized, and whose salaries are declining. To win those allies my faculty colleagues are going to have to abandon political correctness. I think you will see that happen very quickly now.

My Trotskyist friends are in worse shape. Note that socialism will not be on the agenda for either Party. Some Trotskyist talking points will still have traction, e.g., the higher minimum wage, a growth of the union movement, and a dig at the 1%. But the blanket condemnation of individual property and freedom will be a non-starter. Further, most of the Trotskyist movement has aligned itself with radical environmentalism, which will put them at odds with most Traditionalists.

I think Trotskyism will fade into irrelevance. (Actually, I've thought that for a long time.)

A possible exception is the Socialist Workers Party (SWP). The masthead of the The Militant proclaims it's "published in interests of working people." Working people have to have jobs, and so the SWP has wisely distanced itself from the job-killing Greenies. Likewise, they're taking more "conservative" stands regarding Jihadism, Israel, and national defense. They are gradually turning themselves into a Traditionalist grouping. They might survive as such (though they won't be recognizably Trotskyist anymore).

Traditionalist Parties have long existed in Europe, including the National Front in France, UKIP in Britain, and Alternativ fuer Deutschland in Germany. Perhaps Syriza could now be put under that umbrella. In all cases they are becoming simultaneously less socialist and less fascist, and thereby more palatable to a mainstream audience.

So Donald Trump, rather than being an outlier, is a foretaste of politics in the New Normal.

Further Reading:

• Refugees in Hungary
• Book Review: Grover Cleveland
• Louis Proyect's Pro-Poverty Alliance

Money and Gold

An article by John Tamny gives me an opportunity to opine on some topics I've been thinking a lot about. Mr. Tamny expresses an opinion common on the libertarian Right, also held by people like Steve Forbes and Rand Paul. These are people I respect because they get the biggest of the big issues right, namely that economic freedom is the most effective way of reducing poverty and improving living standards. So I'm distressed to have to disagree with them.

The problem is that they are looking for utopian simplicity. Thus they take a grain of truth and exaggerate it into absolute certitude. In extreme forms this leads to completely stupid policy suggestions such as going on the gold standard or abolishing the Fed.

For example, Mr. Tamny makes a claim that is simply not true. He argues that money is money is money, and that the euro is just as good (or bad) a currency as the mark or the franc or the drachma. Greece's problems were not caused by the euro, nor would they be solved by leaving the euro. Indeed, Greece leaving the euro is just as unreasonable as Mississippi leaving the dollar, even though it's vastly poorer than New York or California.

He writes:

In truth, money is solely a measure. I have bread, I want your wine, but you don’t want my bread. Money makes a transaction possible between a baker and vintner with differing wants simply because it’s historically been viewed as a stable “ticket” that allows producers of actual wealth to measure what they produce on the way to trade. Money facilitates exchange, and that’s why a common dollar has long made so much sense. That’s why the euro still makes sense.

He uses an analogy from physics. Whether one measures the distance from Chicago to Milwaukee as 90 miles or 150 kilometers, it's still the same distance. The same is true of money: drachmas, dollars, or euros--there is no real difference.

Of course Mr. Tamny is right on some level. Printing up bits of colored paper does not produce wealth. Devaluing a currency changes no comparative advantage between countries. But he's also wrong. While good money creates no wealth, bad money can certainly destroy it. A country that lacks liquidity or secure banks will be neither productive nor wealthy. And that's the difference between Greece and Mississippi. The latter has good money, while the former doesn't.

Let's count the advantages of Mississippi. Many payments are made independently of Mississippi's wealth. Social security recipients receive the same benefits in Ole Miss as they do in the Big Apple. Military pay is the same, as are payments for civil service and postal employees. Thus a significant fraction of Mississippi's income does not depend on current economic circumstances. By using the dollar they are essentially insured against temporary misfortune.

Greece has none of those benefits.

People in Mississippi can move to New York and vice versa. We both speak the same language, share much of the same culture, drive the same cars, and eat the same food. I could move to Mississippi and within a couple months establish residency, obtain a driver's license, register to vote, join a church, and find a job. In a word, in the dollar zone the labor market is very liquid.

Nominally, Greeks have many of the same rights in Germany, but in practice they don't. Very few Greeks speak German, and even fewer Germans speak Greek. Political institutions are completely different in the two countries. Apart from the exceptional few, Greeks working in Germany can't aspire to anything more than the most menial, low-paid job. And Germans have almost no reason ever to move to Greece. By comparison with the dollar zone, labor markets in the EU are massively inefficient.

Even worse, land title, property rights, investment opportunities, taxes, and almost everything about money do not mean the same thing in Greece as they do in Germany. It's likely not possible to accurately translate the word collateral from one language to the other. That means banking customs have to be different between the countries. A German bank working under German rules will not be successful in Greece, and vice versa. They can't do business the same way.

In order to have a functioning banking system there has to be a lender of last resort. Walter Bagehot describes that necessity precisely in his famous 1873 book entitled Lombard Street. Then the (privately owned) banking department of the Bank of England served that role. In New York and Mississippi it is the Federal Reserve Bank system that does the dirty. Without that guarantee of liquidity all banks in any country will inevitably collapse, credit will disappear, and the economy will shrink.

Mississippi has access to liquidity from the Fed. Deposit insurance applies there as much as it does in New York. Greece, on the other hand, has no guarantee of liquidity unless it follows banking rules set by Germany. Accordingly, Greek banks will eventually fail and everybody knows that. You can't have a growing economy without stable credit markets.

Greece will eventually have to repatriate its banking system. That is, it will have to establish an institution similar to the Fed or the ECB that operates under rules consistent with Greek labor and financial customs. In a word, it needs a drachma. The drachma will not cause economic growth--on this Mr. Tamny is correct--but it is an essential prerequisite before economic growth can occur.

(Mr. Tamny discusses smaller countries that peg their currencies to the dollar or the euro. That works as long as those governments possess sufficient foreign reserves to be a credible lender of last resort. Failing that, the peg will eventually fail. See, e.g., the Argentine peso - dollar peg in effect from 1991 to 2002.)

So it is not true to say that money makes no difference. It makes a huge difference.

Another common simple fix to all our economic woes is to re-institute the gold standard. Mr. Tamny only hints at this in this article, but I'd like to take the topic full on.

Unlike what Mr. Tamny claims, money is not a fixed measure of value in the way a mile is a fixed measure of distance. Money is instead a social convention. You can spend dollars because I'm willing to accept them. That's all there is to it. The value of money is determined by social convention, otherwise known as expectations. I expect a dollar to buy me a donut tomorrow morning. If tomorrow the price of a donut went up to $5, and then the following morning down to thirteen cents, then my faith in the dollar would waver. I'd look for another way to settle my debts.

Inflation is caused when people expect their dollars to buy less tomorrow than they buy today. So they will spend their dollars today. Inflation is not caused by the Fed, or by Congress, or by the price of gold.

Deflation is caused when people expect their dollars to buy more tomorrow than they buy today. So they will stash their dollars and spend them tomorrow. Deflation is not caused by the Fed, or by Congress, or by the price of gold.

Inflation and deflation are caused by changes in expectations. Now in extreme cases--e.g., helicopter drops of massive amounts of currency--the Fed can change expectations. And the Fed certainly tries to change expectations. Mr. Tamny undoubtedly recalls the famous words that Janet Yellen uttered on July 15th of last year. Did she say something about "patience" and "data-driven analysis?" Or was it the other way around? Every speech ever made by Ms. Yellen (or Mr. Bernanke before her) sounds exactly the same. Some days the market moves up. Other days the market moves down.

The Fed is irrelevant. Nothing they do matters at the margin. (Nothing, that is, except their role as the lender of last resort.) All these people who hyperventilate about how the Fed is doing it wrong (or right), or who care about what magic words the Chairman will utter next week or next month, are wasting their time and breath. The Fed has nearly zero control  over inflation, velocity, exchange rates, money supply, interest rates, or anything else.

So now the gold bugs want to have the Fed regulate the price of gold. The largest consumers of gold are jewelry buyers in India. How regulating the jewelry business in India is going to help the US economy is a big mystery to me. But it gets worse. Any regulatory agency is eventually captured by the industry it is trying to regulate. So the Fed (which has no other important function except to serve as the lender of last resort) will eventually kowtow to the needs of Canadian miners and Indian jewelers.

In Mr. Bagehot's day gold was used to reconcile debts between countries. So if an Englishman owed money to a Frenchman, the debt would be settled in the common currency--gold. That led to all sorts of opportunities for arbitrage and fraud, as the book describes.

Today it's much more efficient. We have a foreign exchange market that trades more than $5 trillion dollars every day. It's the biggest, most liquid, most efficient market on earth. But the gold bugs don't like it--they want to force all trades to go through gold first. Why?

Compare that amount with what the people who fret over the feckless Fed are worried about. At the height of quantitative easing, the Fed was pushing less than $3 billion per day into the economy. Our Fed fretters predicted imminent inflation and forecast a rise in the gold price to over $2000/oz. But it's less than 0.1% of the daily currency trade. It's a gnat on the back of an elephant. QE had absolutely zero impact on inflation in the US. It was a complete non-event.

Further Reading:

• Are Swiss Bankers Stupid?
• The Laws of Economics
• Book Review: Conservative Insurgency

Book Review: Arnold Kling's Macroeconomics Book

Psst! The Wizard is powerless!

So claims Arnold Kling in his deeply subversive little book formally entitled Memoirs of a Would-be Macroeconomist, but known in Mr. Kling's blog simply as "my macroeconomics book."

He should know, of course. He worked for the Fed from 1980 to 1986 during the reign of Paul Volcker. He was a worker bee in a very busy office, collecting data, analyzing reports, coding FORTRAN, and doing other things staff economists do. He was close enough to the Wizard to know what was going on, and yet apparently had no position of any power. It's what I'd call the perfect fly-on-the-wall appointment.

So with all that effort, the Wizard stood behind his curtain, tweaking the carefully calibrated dials, turning knobs, pulling on levers and pushing buttons. The monetary machinery creaked and groaned, serviced by the army of economists including Mr. Kling, who oiled it for greater transparency and efficiency. Yet still, despite their best efforts, great clouds of irrational obfuscation issued forth.

Mr. Volcker is widely credited for ending the inflation of the 1970s, but Mr. Kling doesn't give him much credit. He writes

I might argue that it was not Volcker who made the difference [in inflation]. ...What I am suggesting is that the high inflation of the late 1970s may have been self-correcting. It resulted in weakness in the stock market and in housing, which then created severe recessions--remember, the unemployment rate climbed over 10 percent in the second half of 1982. Yes, most economists say that was due to monetary tightening, but I am suggesting that it was due to financial dynamics that were playing out regardless of what the Fed was doing.

Contrary to mainstream thinking, Mr. Kling argues that (short of the full Zimbabwe), inflation is not very susceptible to either monetary or fiscal policy. Expectations control inflation more than most economists acknowledge--as the money supply is increased, the market automatically corrects by reducing the velocity, and vice versa.  Mr. Kling's opinion is that QE, tapering, and Fed-speak are mostly if not entirely irrelevant.

That differentiates him from the folks (charlatans?) over at ZeroHedge or Occupy, who believe that the Fed is actively malign. But powerlessness implies an inability to do evil as much as good. Besides, Mr. Kling has a great deal of respect for his former bosses--he credits them with good intentions, and even for a few good deeds. In his list of economists who have led "interesting lives," (that he himself might like to have lived) Mr. Bernanke comes in for special praise, but mostly for his research rather than his chairmanship.

Mr. Kling's alternative to standard macroeconomics is something called patterns of sustainable specialization and trade (PSST). He describes it nicely in his book. For a more scholarly account you can download a pdf here. I will summarize it in two sentences:

Entrepreneurs, mostly by trial and error, will look for ways to maximize value from existing resources. In response to change, new economic patterns will evolve over time that optimize the consumer surplus.

As Mr. Kling generally rejects mathematical models as unrealistically simple, mainstream economists obviously dislike his view. He's basically telling them that they've wasted their professional lives for the past thirty years.

There is a view that is more charitable to the mainstreamers. One can accuse PSST of being untestable and unhelpful. In discarding econometric models, Mr. Kling essentially throws up his hands in despair and asks us to abandon all hope of messing constructively with the economy. This is a rather depressing conclusion that people of good will prefer to reject.

But I think PSST allows for some predictions. In particular, I think it renders the two recent books by Tyler Cowen (the world's most overrated economist?) wrong. In The Great Stagnation Mr. Cowen argues that technological change has come to a (temporary) halt, and we've already consumed the benefits from electrification, the IC engine, etc. Thus economic growth is in decline, and this accounts for the declining wages, unemployment, etc.

But this doesn't square with PSST. Absent technological change, the economy should be stagnant. That means that the optimal patterns of specialization and trade would already be in place, with consumer surplus maximized. Thus, rather than there being unused resources, all resources would be used to maximum extent. Of course the "boom" wouldn't really exist--consumer surplus would never grow. Indeed, it might gradually shrink, and despite the full employment we would all be getting steadily poorer. (Think of it as an economy with no additional labor-saving devices.)

That doesn't describe our current economy. Instead of stagnation we have crisis. That means there is rapid change occurring that renders existing patterns non-optimal. I think that change is fairly obviously technological, so the great stagnation theory is wrong.

Mr. Cowen's second book, Average is Over, contradicts the stagnation thesis, arguing that rapid technological change in the form of computer automation will put huge numbers of people out of work. He suggests that, despite marvelous new technology, up to 80% of us will be in absolute terms poorer than we are today. (You can't win with this guy--technology or no, we're all gonna get poorer no matter what.) But PSST says this can't be true, at least not in the long term. Entrepreneurs are not going to leave 80% of human capital sitting on the table collecting no return--that is clearly not an optimal pattern. So while almost everybody agrees that in the short term new technology will be highly disruptive, in the longer term new patterns will evolve that utilize the existing human resources. New technology will eventually show up as added consumer surplus.

My claim is that Mr. Kling's book is subversive. Of course it undermines mainstream economics. It also diminishes the Austrians, Austerians, NGDP, DSGE, neo-Keynsians, and the doomsters over at ZeroHedge. I like PSST because I think it correctly predicts that new technology will make us richer. I've argued along similar lines in my post here.

The second way Mr. Kling is subversive is his status in the profession--he has none. He occupies no faculty chair, nor has he ever served as a policy maker in government. Following his fly-on-the-wall stint at the Fed, he held a similar position at Freddie Mac. He then went on to start an Internet company, which made him financially independent. I understand that his day job now is teaching high school, undoubtedly done as a labor of love. (Lucky students!) The title of his memoir gives it away: Memoirs of a Would-be Macroeconomist.

Third, Mr. Kling writes a professional memoir rather than a scholarly article. That makes it much more interesting to read, and it also lets him draw on his extensive and relevant experience. But this is not the typical way that academic research proceeds. Rather than just the in-crowd, Mr. Kling is addressing readers like me--interested laymen curious about economics. (I'm a rank amateur, with no formal economics education whatsoever.) Of course I prefer that approach, but apparently the cognoscenti do not. The book has not been widely reviewed. I don't believe the book is mentioned on Tyler Cowen's blog at all. This is discouraging.

Finally, and related to the third point, Mr. Kling obeys Trotsky's First Law, which states that the value of a scholarly article is inversely proportional to the height of the paywall, that judged not just by the subscription fee, but also the time and effort required to read it. Mr. Kling accordingly values his work very highly--it is an enjoyable (if not always easy) read, only 120 pages long, and is available for FREE.

Psst! I think Mr. Kling has written a very important book. Pass it along.

Further Reading:

• Thomas Piketty & The Marxist Meme
• Book Review: Average is Over
• Book Review: The Three Languages of Politics
• Why The Academy Sucks

Book Review: The Three Languages Of Politics

Convention has it that there are two major political parties in America: The Evil Party and The Stupid Party. Now comes Arnold Kling to tell us convention is wrong.

Mr. Kling's goal, in his short e-book, is to enhance conversation among people of different political opinions. Too often, we write off our opponents as either stupid or evil because they appear not to understand even simple political or economic facts. Kling proposes a framework that will at least let us talk to each other, even if we never reach agreement.

Given this blog's purpose to serve both Trotskyists and Republicans at the same time, Kling's topic is of great interest to me. This isn't just talking across the aisle--I'm trying to talk across the class line. So if Mr. Kling has some advice for how to pull off that trick, I'm all ears. It is so easy for Republicans to dismiss Trotskyists as "stupid." Indeed, in this blog's first incarnation I routinely referred to the SWP (Socialist Workers Party) as the Stupid Workers Party. And I know from my time in the SWP that comrades see Republicans as intrinsically evil (think Richard Nixon).

Now I've set some ground rules for myself--nobody is going to listen to me if I just insult them. Hence I take Trotskyism seriously--I do not believe that comrades are mentally ill, or members of a cult. But Mr. Kling offers some insight beyond rules for civil discourse, and they're worth paying attention to.

Kling suggests that there are three political ideologies in America, which he roughly labels as Progressive, Conservative and Libertarian. These three groups use different languages--that Kling calls heuristics--and from this he derives a three-axis model. Progressives organize ideas around an oppressor/oppressed axis. Hence they are primarily interested in social justice, and in righting historical wrongs. Conservatives think in terms of a civilization/barbarism axis. Accordingly they emphasize stable institutions (church, family, law), and tend to resist sudden changes. Finally, Libertarians orient according to a freedom/coercion axis. They're worried about big government, too much taxation, gun control, and too much environmental regulation.

Mr. Kling provides a nine-point quiz that will roughly place you somewhere within this space. His test correctly puts me half way between the Libertarian and Conservative axes. Accordingly, I could never vote for Ron Paul, but I'm also somewhat uncomfortable with true conservatives such as Rick Santorum or Mike Huckabee. Herman Cain's message really resonated with me. I'm a Republican, though one that leans toward the Libertarian end.

Mr. Kling points out that some languages are more suitable for some topics than others. His examples include the civil rights movement, where the Progressive heuristic looks to work best. Blacks really were oppressed, and defining the struggle as oppressed vs. oppressor was accurate. Compare that with the Libertarian response: Goldwater thought that any equal accommodations law was an unjustified infringement on individual freedom. Private business should be able to discriminate if they want to. Needless to say, Libertarians didn't get very far with that argument.

Conversely, on economic issues Libertarians usually win. That economic freedom enhances well-being is an almost indisputable fact, and casting economic policy along the freedom/coercion axis will lead to a richer society.

Trotskyists align very much along the progressive axis. The difference between oppressor and oppressed widens into the unbridgeable class line. The Marxist meme is we're poor because the rich people stole all the money, which is as progressive a phrase as one could possibly have.

Mr. Kling quotes Stephen Covey: "seek first to understand, then to be understood." Since Trotskyists are mostly concerned with social justice, they are unlikely to be persuaded by any rising tide lifts all boats argument. Efficiency, for them, is not important. Equality in outcomes is essential. We do not have to agree with them (I don't), but before we can talk to them we need to know where they are coming from. With that understanding, they will neither seem evil nor stupid. They're still wrong.

So far, so good. The second half of Mr. Kling's book is less satisfying. He distinguishes between motivated reasoning and constructive reasoning. Motivated reasoning is what most humans do most of the time: that is, we try to marshal data in support of our invested opinion. Contrary data leads to cognitive dissonance, which is painful. For reasons of ego, or for reasons of group affiliation, we choose our opinion first, and then cherry pick data to support it.

Constructive reasoning is the reverse, i.e., we discover the facts and then form an opinion based on those. This is how Mr. Spock in Star Trek behaves, and needless to say he isn't fully human. Most people can't behave that way. Still, one can approach constructive reasoning, and Mr. Kling argues that people who are serious about political discourse should strive for that goal.

To see how well we do, Mr. Kling picked three prominent columnists, each partial to an axis, and compared notes. The examples he chose were E. J. Dionne (progressive), Victor Davis Hanson (conservative) and Nick Gillespie (libertarian). Predictably, they all failed his test of being constructive thinkers--each defended his own point of view without indicating any understanding of the other.

And yet I don't think that's completely fair. First, Kling sampled only columns, which by design are short, propaganda pieces. He'd have done better if he'd looked at longer writing in journals like The New Republic or National Review. Second, while I've never met any of these people, I'm fairly certain that they all read each other's work. They talk to each other. I don't believe that Mr. Kling's schema will come to them as a surprise. They're as close to constructive thinkers as we're likely to find among non-Vulcans.

Compare that with my fellow faculty at the college where I'm a professor. They are all progressives--at faculty meetings it's just assumed that everybody is a Democrat. But despite their theatrical, political grandstanding, they know much less about politics than any of Kling's columnists. They have probably never even heard of either Hanson or Gillespie, and all they ever read is The New York Times. They live in an echo chamber, and are an excellent example of what Kling calls group affiliation. College faculty are Lefties because that's how you establish your credentials as part of the group. If you're not part of the group, you won't be successful and you won't get tenure.

There's no point in talking to these people. As I get older and closer to retirement I don't need to group-affiliate any more. I think that's why I'm writing letters to Trotskyists. Despite being wrong, they are at least honest and committed people--neither stupid nor evil.

I disagree with how Mr. Kling brings social science to his argument--I think he overstates the importance of Jonathan Haidt. But I’m out of space for now, so that discussion will have to wait for another time.


Further Reading

• Marxism & EvoPsych
• Women's Work
• Is Marxism Dead?
• Is the SWP a Cult?