Some Galaxy Brain Thinking on the Shutdown and Its Economic Impact

 

The easy — though not entirely wrong — analysis of the ongoing government shutdown is that it’s a political event rather than a market or economic event. For Republicans and Democrats, the shutdown is the ultimate cage match with big potential electoral and policy implications. As the Washington Post characterizes the standoff: “[President Trump] has to win. His entire reputation, his entire relationship with the base, it’s all a function of being committed on big things and not backing down. If he backs down on this, Pelosi will be so emboldened that the next two years will be a nightmare.” Big stakes, to say the least.

But not so much for Wall Street. At least not yet. Perfect example: JPMorgan economist Michael Feroli has lowered his estimate of first-quarter real GDP growth to 2.0 percent from 2.25 percent with the “primary reason” for the revision being the shutdown. And although the longer the shutdown lasts the greater the risk of “spillover to the private sector,” Feroli adds, his downward revision to growth this quarter implies a lift to the second quarter (assuming the shutdown is over). So, even-steven, more or less.

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The Greatness of Harold Demsetz

 

This past week, Harold Demsetz, one of the great economists of the Chicago School, died in California at the age of 88. In one sense, Demsetz’s passing marks the end of an era now that the Chicago School of Economics, to which I generally subscribe, is subject to multiple sustained attacks. Behavioral economists, such as Daniel Kahneman, believe the secret to understanding human behavior lies in identifying, through experimental observation, anomalies in individual choices tending to undermine the axioms of rational choice theory. Meanwhile, other modern populists such as legal scholars Tim Wu and Lina Khan attack Chicago-style antitrust law for wrongly exalting economic efficiency over all other values, such as the protection of small businesses from competition or the ability of moral communities to flourish when operating in the large shadow of powerful economic firms.

Demsetz would have none of this. As if to rebut these novel approaches in advance, Demsetz constantly stressed the dangers of falling prey to the “nirvana fallacy,” or the view of public policy that “implicitly presents the relevant choice as between an ideal norm and an existing ‘imperfect’ institutional arrangement. This nirvana approach differs considerably from a comparative institution approach in which the relevant choice is between alternative real institutional arrangements.” As economist Peter Boettke has pointed out, Demsetz never quarreled with success in the marketplace. If firms like Amazon and Netflix can obtain and sustain a dominant position, it is because they have figured out a formula for success that they constantly adjust to ensure that some new upstart competitor in these “contestable” markets does not take their place. Demsetz was right to scorn the populist critique of popular firms that succeed because they offer low prices and excellent service.

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Finance and Economy, What is it?

 

Economics. The value of something, say land, is how much increase you can get from it, in money or trade, or happiness. Land can be increased in value by labor, by enriching the soil by certain farming practices, including build structures out of the contents of the land and so forth. Money has value, is […]

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While Hawaii Rep. Tulsi Gabbard has come under deserved fire for defending Syrian dictator Bashar al-Assad, Jim Geraghty of National Review and Greg Corombos of Radio America are applauding Gabbard today for being the only Democrat willing to stand up to Senate Democrats who contend that being a member of the Knights of Columbus is disqualifying for service as a federal judge. They also brace for the imminent presidential campaign of California Sen. Kamala Harris, who is very liberal but is one of only a few Democrats with a legitimate shot at the nomination. And, as more stories emerge of the fiscal hardship of federal employees going without pay during the partial shutdown, they are staggered by statistics showing that nearly 80 percent of Americans live paycheck to paycheck and over 60 percent don’t have enough money saved to cover six months of expenses.

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Jim Geraghty of National Review and Greg Corombos of Radio America think President Trump did alright in his speech and agree that his presentation was better than the stiff stares of Chuck Schumer and Nancy Pelosi. They also shake their heads in wonder as more Democrats embrace huge tax increases and government-run health care and Jim breaks down the truly radical ideas contained in Alexandria Ocasio-Cortez’s Green New Deal. And speaking of the new congresswoman, Jim unleashes a fantastic rant after Ocasio-Cortez suggests on national television that the people trying to enter the U.S. illegally are more American than people who want a border wall.

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eBay Shill Bidding: Do They Really Care?

 

It has been a long time since I purchased anything on eBay, but in browsing around I found an SUV that looked like it met our needs at a fair price, and bid on it during the auction. In the last few seconds, as expected the price escalated rapidly – by a few thousand. In the end, I was outbid. Within seconds of the auction closing, I received an email from eBay offering me a “Second Chance Offer” to buy the SUV. At first, I was thrilled, but after some thought, began to question the process.

I was previously unaware that eBay had a “Second Chance Offers” policy. Did a little research. The eBay site offers this info for sellers on the circumstances when they can use this tool:

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Before We Crank Up Tax Rates, Let’s Have a Smart Debate

 

It now seems there’s going to be a national conversation about whether top federal tax rates should be dramatically higher. And for that, you can partially credit first-term House member Alexandria Ocasio-Cortez — as well as the extreme media attention given to her every policy utterance. But only partial credit here. At a time of a) high national debt that’s heading even higher, and b) increased inequality — including the creation of some truly massive personal fortunes — it’s a discussion that was probably inevitable.

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Jim Geraghty of National Review and Greg Corombos of Radio America are grateful to see House Democrats revealing their real goals right from the start – impeachment, huge tax increases, abolishing the electoral college – and hope Americans see what they’d be getting if Democrats also controlled the Senate and the White House. As the partial government shutdown creeps towards three weeks, some conservatives are concluding that because their lives haven’t changed much, the impacted agencies aren’t really needed. Jim explains why that conclusion is badly misguided. And they throw up their hands as the mainstream media concoct the narrative that Republicans condemned Alexandria Ocasio-Cortez for dancing in a video, when only one anonymous Twitter user lashed out and any conservative who weighed in on the matter defended the congresswoman.

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Conservative Populism: Tucker Carlson vs. David French

 

Tucker Carlson has recently done an exposition on populism that has gone viral. It is biting and rangy, covering a bunch of topics related to populism but from a conservative perspective. This has drawn fire from some on the Right that view populism as an evil thing that good folks on the Right should avoid. David French has a response in National Review where he blasts Carlson and populism in general.

What is populism and does it fit with conservative values? I think it does when taken in good measure. I think Carlson and French are both too extreme.

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Jim Geraghty of National Review and Greg Corombos of Radio America applaud the Trump administration for keeping its word to aggressively roll back burdensome government regulations. They also roll their eyes as House Democrats pass a bill to end the partial government shutdown that has zero chance of becoming law. And they react to new Michigan Rep. Rashida Tlaib admitting, through coarse language, that she came to Washington to impeach President Trump.

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It’s 2019: What Did Blade Runner Get Right and Wrong?

 

Three well-known science fiction films all take place in this new year of 2019: “Blade Runner” (1983), “The Running Man” (1987), and “Akira” (1988). “Blade Runner,” although released longest ago, may be freshest of mind thanks to the excellent 2017 sequel, “Blade Runner 2049.” And when that follow-up hit the big screen, there were plenty of news stories comparing the technological predictions of the two films to the tech gear we actually have today. For instance: The two movies show or suggest far more advanced AI, robotics, biotechnology, and space travel (lots of theorizing that the “Blade Runner” and “Alien” franchises kinda-sorta exist in the same universe), as well as the famous physics-defying flying cars or “spinners.”

On the other hand, the real 2019 has far better communication tech thanks to the internet and smartphones. And since the original “Blade Runner” missed that information revolution, it also of course missed the accompanying business disruption. It featured companies such as Atari, Bell Telephone, and RCA as important tech sector players. It’s a theme that “Blade Runner 2049” continued as creators chose to show a world where Atari is a tech colossus rather than Apple or Microsoft, which both existed when “Blade Runner” was released. The films depict a reality where there’s not a lot of obvious Schumpeterian creative destruction. Yet one would think there would need to be plenty of entrepreneurial and technological churn to arrive at a place where advances such as off-world colonies and replicants exist.

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Happy New Year! Jim Geraghty of National Review and Greg Corombos of Radio America are back and ready to tackle 2019. Today, they blast incoming Utah Sen. Mitt Romney for heading to the Washington Post and CNN to discuss his concerns about President Trump on the eve of being sworn in, although they share many of his concerns. They also sigh as Massachusetts Sen. Elizabeth Warren launches her presidential exploratory committee by whipping up accusations of class warfare. And they discuss the strategy of Washington Gov. Jay Inslee to run for president on the single issue of climate change.

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Jim Geraghty of National Review and Greg Corombos of Radio America announce three more prestigious year-end awards. Today they look at the stories the mainstream media covered far too much, the ones they conveniently ignored because they didn’t fit their narrative, and what they saw as the best stories of 2018.

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Jim Geraghty of National Review and Greg Corombos of Radio America embark on the second half of their six-episode saga known as the 2018 Three Martini Lunch Awards. Today, Jim and Greg offer up their selections for the best political idea, worst political idea, and boldest political tactics for 2018.

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Jim Geraghty of National Review and Greg Corombos of Radio America offer the second installment of their prestigious year-end awards. Today they remark on someone they’re sorry to see go, with Jim focusing on an important conservative leaving office and Greg honoring a key figure who left us in 2018. They also share their choices for rising political stars and the political figures who appear to be fading into oblivion – rarely to be heard from again.

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5 Charts on the Economic Gaps Between Urban and Rural America

 

So Goldman Sachs has put out a megareport on the issue of American geographic disparity. Dozens of charts looking at the various economic differences between rural, urban, and suburban areas, and between small and medium-sized towns vs. prime cities. A few examples:





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Jim Geraghty of National Review and Greg Corombos of Radio America fume as President Trump says ISIS is defeated in Syria on Wednesday and Thursday he claims that Russia, Iran, and Syria can handle the fight. They’re also disgusted as Trump’s insistence on $5 billion for a border wall seems to be shifting and congressional Republicans appear to have no interest in this fight despite promising one just before the midterm elections. And they hold the door open for Sen. Jeff Flake to leave and never come back as the retiring Arizona lawmaker proposes a new carbon tax just days before leaving office.

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America Might Be Richer and More Powerful in 20 Years Than You Expect

 

Let’s take a moment and ignore the bouncing stock market. Let’s cease with speculation about how the American economy will perform over the next year or two — and its possible impact on politics. Let’s both pull back the camera from current events and point it toward the far horizon.

What might things be like in, say, 2040? The expert consensus predicts the same old, same old economic growth, about the same pace as we’ve seen throughout the 2000s. A (maybe, nearly, hopefully) 2 percent economy. Real GDP will likely grow at about half the pace of what it did in the last half of the 20th century.

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Jim Geraghty of National Review and Greg Corombos of Radio America briefly react to the news Martha McSally will be appointed to fill the Arizona Senate seat once held by John McCain until the next election. Then they welcome a New York judge lifting the ban on nunchucks in the state and offering a great defense for the right to keep and bear arms in the process. They also squirm a bit as a growing number of economic forecasters think we could hit a recession in 2019. And they discuss the presidential prospects of Hawaii Rep. Tulsi Gabbard, who gained admiration on the right for her criticism of Obama foreign policy until she inexplicably started defending Syrian dictator Bashar al-Assad.

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Populism, Economic Nostalgia, and ‘Left Behind’ America

 

Economic nostalgia is a notable attribute of America’s populists on the left and right. If not for the mistakes of elite policymakers, the economic golden age of postwar America might never have ended. But it’s not just economic nostalgia that unites populists across the political spectrum. It is also the idea that reality puts no constraints on policymakers’ actions, or at least the effectiveness of those actions. Take the issue of what to do about America’s “left behind” regions. It’s the subject two outstanding pieces, one in The New York Times by Eduardo Porter, the other in The Wall Street Journal by Christopher Mims. Both are definitely worth a read.

In “The Hard Truths of Trying to ‘Save’ the Rural Economy,” Porter notes the “inescapable reality of agglomeration.” Innovative companies, the sort that generate high-paying jobs, want to locate near other innovative companies so they can tap deep pools of high-skilled worker talent. And thus you have Amazon building new campuses in New York City and Washington DC, rather than Columbus, OH. Sure, policy wonks have lots of ideas to help distressed communities take part in the evolving American economy — tech education initiatives, broadband investment — but there are no guarantees. As Brookings scholar William Galston is quoted, “I don’t know if these ideas are going to work. But it is worth making the effort.”

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