Hexapodia Is the Key Insight!

Key Insights:

* Economic arguments against higher taxes that may have been somewhat plausible back in the days of 70% or so maximum individual and 40% or so maximum capital gains tax rates simply do not apply now.

* Right-wing parties that don't think they can credibly make the argument that cosseting their core constituencies is necessary for rapid economic growth search for some non-economic cleavage in which the rich and the right-thinking poor, or the right-colored poor, can be on one side and the people who seek a fairer and more equal distribution of income and higher taxes on the rich can be put on the other—let's all yell about critical race theory, and maybe they won't pay attention to the fact that we just, you know, take everybody's money.

* Capital to fund investment is really not a big constraint right now—incentivizing savings in financial assets really is just pushing on a string.

* Companies with investments that have high societal value in expansion need to be properly incentivized—either by the smell of more profits next year from serving a larger market with lower costs of production through larger scale, or through the government paying and so getting prices righter than the free market gets them.

* “Doge coin” is pronounced with a soft “g” sound.

* No, Doge coin is not named after the title of the head of state of the Venetian Republic

* Doge coin’s name comes from the Homestar Runner line: “I want a doge”…

* Hexapodia!

References:

Len Burman (2021): Biden Would Close Giant Capital Gains Loopholes—At Least For The Rich <https://www.taxpolicycenter.org/taxvox/biden-would-close-giant-capital-gains-loopholes-least-rich>

Peter Diamond & James Mirrlees (1971): Optimal Taxation and Public Production I: Production Efficiency <https://www.jstor.org/stable/1910538>

Peter Diamond & James Mirrlees (1971): Optimal Taxation and Public Production II: Tax Rules <https://assets.aeaweb.org/asset-server/journals/aer/top20/61.3.261-278.pdf>

Ken Judd (1999): Optimal Taxation and Spending in General Competitive Growth Models <http://darp.lse.ac.uk/PapersDB/Judd_(JPubE_99).pdf>

Paul Krugman (2021): Why Doesn’t Cutting Taxes on the Wealthy Work? <https://www.nytimes.com/2021/04/30/opinion/tax-cuts-rich.html>

Jacob Lundberg & Johannes Nathell (2021): Tax Burden on Capital Income: International Comparison <https://taxfoundation.org/tax-burden-on-capital-income/>

Robert McClelland (2021): Avoiding Biden’s Proposed Capital Gains Tax Hikes Won’t Be So Easy. Or Will It? <https://www.taxpolicycenter.org/taxvox/avoiding-bidens-proposed-capital-gains-tax-hikes-wont-be-so-easy-or-will-it>

Alicia Munnell (2021): Biden’s Plan to Fully Tax Capital Gains Is Good Policy<https://www.marketwatch.com/story/bidens-plan-to-fully-tax-capital-gains-is-good-policy-11620658190>

Garrett Watson & Erica York (2021): Capital Gain Rates Under Biden Tax Plan<https://taxfoundation.org/biden-capital-gains-tax-rates/>

Thomas Piketty & Emmanuel Saez (2012): A Theory of Optimal Capital Taxation <http://gesd.free.fr/w17989.pdf>

Ludwig Straub & Ivan Werning (2020): Positive Long-Run Capital Taxation: Chamley-Judd Revisited <https://www.aeaweb.org/articles?id=10.1257/aer.20150210>

Tax Foundation (2017): Preliminary Details and Analysis of the Tax Cuts and Jobs Act <https://taxfoundation.org/final-tax-cuts-and-jobs-act-details-analysis/>

&, of course:

Vernor Vinge: A Fire Upon the Deep <https://books.google.com/books?id=fCCWWgZ7d6UC>

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Key Insights:

* Cory Doctorow is AWESOME!

* It is depressing. We once, with the creation of the market economy, got interoperability right. But now the political economy blocks us from there being any obvious path to an equivalent lucky historical accident in our future.

* The problems in our society are not diametrically opposed: Addressing the problems of one thing doesn't necessarily create equal and opposite problems on the other side—but it does change the trade-offs, and so things become very complex and very difficult to solve.

* Always keep a trash bag in your car.

* Hexapodia!

References:

Books:

Cory Doctorow: How to Destroy Surveillance Capitalism <https://www.google.com/books/edition/How_to_Destroy_Surveillance_Capitalism/W20NzgEACAAJ>

Cory Doctorow: Attack Surface <https://www.google.com/books/edition/Attack_Surface/rFfEDwAAQBAJ>

Cory Doctorow: Walkaway <https://www.google.com/books/edition/Walkaway/MKMsDAAAQBAJ>

Cory Doctorow: Down & Out in the Magic Kingdom <https://www.google.com/books/edition/Down_and_Out_in_the_Magic_Kingdom/h8DvDwAAQBA>

Cory Doctorow: Little Brother <https://www.google.com/books/edition/Little_Brother/r1zne2mZDW8C>

William Flesch:Comeuppance: Costly Signaling, Altruistic Punishment, and Other Biological Components of Fiction <https://www.google.com/books/edition/Comeuppance/JSRWPYp1nNUC>

Daniel L. Rubinfeld: A Retrospective on U.S. v. Microsoft: Why Does It Resonate Today? <https://journals.sagepub.com/doi/abs/10.1177/0003603X20950227>

Louis Galambos & Peter Temin: The Fall of the Bell System: A Study in Prices & Politics <https://www.google.com/books/edition/The_Fall_of_the_Bell_System/CXNPVjdxfAEC>

Websites:

Electronic Frontier Foundation: <http://www.eff.org>

* Adversarial Interop Case Studies: <https://www.eff.org/deeplinks/2019/10/adversarial-interoperability>

* Privacy without Monopoly: <https://www.eff.org/wp/interoperability-and-privacy>

Cory Doctorow: Craphound <http://craphound.net>

Cory Doctorow: Pluralistic <https://pluralistic.net>

&, of course:

Vernor Vinge: A Fire Upon the Deep <https://books.google.com/books?id=fCCWWgZ7d6UC>

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Grammatized Transcript:

Brad: Noah! What is the key insight? 

Noah: Hexapodia is the key insight! Six feet!

Brad: And what is that supposed to mean? 

Noah: That there is some nugget of fact that, if you grasp it correctly and place it in the proper context, will transform your view of the situation and allow you to grok it completely.

Brad: And in the context of Vernor Vinge’s amazing and mind-Bending science-fiction space-opera novel A Fire Upon the Deep?

Noah: The importance of “hexapodia” is that those sapient bushes…

Brad: …riding around on six wheeled scooters have been genetically…

Noah: …programmed to be a fifth column of spies and agents for the Great Evil.

Brad: However, here we seek different key insights than “hexapodia”. Today we seek them from the genius science-fiction author and social commentator Cory Doctorow. I think of him as—it was Patrick Nielsen Hayden, I think, who said around 2004: that he felt like he was living in the future of Scottish science fiction author, Ken MacLeod. And he wished Ken would just stop. At times I feel that way about Cory. But we are very happy to have him here. His latest book is How to Destroy Surveillance Capitalism IIRC, his latest fiction is Attack Surface. My favorite two books of his are Walkaway and—I think it was your first—Down & Out in the Magic Kingdom.

Cory: That's right. Yes. Thank you. Thank you for that very effusive introduction. I decry all claims of genius, though.

Brad: Well, we know this is a problem. When one is dealing with an author whose work one has read a lot of—by reading your books.by now I've spent forty hours of my life looking at squiggles on a page or on a screen and, through a complicated mental process, downloaded to my wetware and then run on it a program that is my image of a sub-Turing instantiation of your mind, who has then told me many very entertaining and excellent stories. So I feel like I know you very well…

Cory: There’s this infamous and very funny old auto reply that Neal Stephenson used to send to people who emailed him. It basically went: “Ah, I get it. You feel like you were next to me when we were with Hero Protagonist in Alaska fighting off the right-wing militias. But while you were there with me, I wasn't there with you. And so I understand why you want to, like, sit around and talk about our old military campaigns. But I wasn't on that campaign with you.

Brad: Yes. It was only my own imago, my created sub-Turing instantiation of your mind that was there…

Cory: Indeed. We are getting off of interoperability, which is what I think we're mostly going to talk about. But this is my cogpsy theory of why fiction works, and where the fanfic dispute comes from. 

Writers have this very precious thing they say. It is: “I'm writing and I'm writing and all of a sudden the characters start telling me what they want to do.” I think that what they actually mean by that is that we all have this completely automatic process by which we try and create models of the people we encounter. Sometimes we never encounter those people. We just encounter second-hand evidence of them. Sometimes those people don't live at all. Think about the people who feel great empathy for imaginary people that cruel catfishers have invented on the internet to document their imaginary battles with cancer. They then feel deeply hurt and betrayed and confused, when this person they've come to empathize with turns out to be a figment of someone else's imagination. 

I think what happens when you write is that you generate this optical link between two parts of your brain that don't normally talk to each other. There are these words that you are explicitly thinking up that show up on your screen. And then those words are being processed by your eyeballs and being turned into fodder for a model in this very naive way. And then the model gets enough flesh on the bones—so it starts telling you what it wants to do. At this point you are basically breathing your own exhaust fumes here. But it really does take what is at first a somewhat embarrassing process of putting on a puppet show for yourself: “Like, everybody, let’s go on a quest!” “That sounds great!” “Here we go!” It just becomes something where you don't feel like you're explicitly telling yourself a story. 

Now the corollary of this is that it sort of explains the mystery of why we like stories, right? Why we have these completely involuntary, emotional responses to the imaginary experiences of people who never lived and died and have no consequence. The most tragic death in literature of Romeo and Juliet is as nothing next to the death of the yogurt I digested with breakfast this morning, because that yogurt was alive and now it's dead and Romeo and Juliet never lived, never died, nothing that happened to them happened. Yet you hear about the Romeo and Juliet…

Noah: …except that a human reads about Romeo and Juliet and cares…

Cory: That is where it matters, yes indeed. But the mechanism by which we care is our build this model which is then subjected to the author's torments, and then we feel empathy for the model. What that means is that the readers, when they're done, if the book hit its aesthetic marks, if it did the thing that literature does to make it aesthetically pleasing—then the reader still has a persistent model in the same way that if your granny dies, you still have a model of your granny, right? You are still there. 

That is why fanfic exists. The characters continue to have imagined lives. If the characters don't go on having imagined lives, then the book never landed for you. 

And that’s why authors get so pissy about fanfic. They too have this model that they didn't set out to explicitly create, but it's there. And it's important to the…

Get full access to DeLong's Grasping Reality Weblog at braddelong.substack.com/subscribe

Key Insights:

* Getting the rate of profit—the sums that are charged businesses for renting machines and renting space, and for access to the generalized social power to deploy resources that is finance—right is a very, very important thing to do. Why? Because the market economy is a complicated institutional calculating machine for determining how to promote societal wellbeing. It cannot do its job if it cannot see the the constraints imposed on us by nature and current technology. And having the market get the profit rate right is a very important part of that. To say “it’s all ideology” or “it’s all power” or “it’s all distribution” and go the full Sraffa production-of-commodities-by-means-of-commodities is to miss a truly powerful, relevant, and important insight. That’s the strongest statement of what the Cambridge, Massachusetts-MIT side was really getting at—or ought to have been getting at, although they phrased it badly and inaccurately.

* If we attempt to use toy mathematical models applied to macro aggregates to say anything quantitative about whether business owners are getting paid “too much” or “too little”, we will fail embarrassingly. Therefore we should never use toy models to do that.

* To say that the market-equilibrium profit rate is the optimal one from the perspective of societal well-being is to commit the pseudo-pharisaical mistake of reversing the order of importance. Rather, recognize: the market was made for man, not man for the market. 

* The particular language in which the economists of the 1960s carried out this debate was extremely poorly suited to shed light. They cared deeply, they wrote angrily, and most of what they wrote was drivel. So: whenever you are having a discussion, if you want to learn or teach anything, first do this: try hard to figure out what issues really are, and then try hard to figure out what is the right language to talk about these issues.

* As always, the key insight is: “Hexapodia”.

“It was not called the ‘net of a million lies’ for nothing…”

References:

Roger E. Backhouse: MIT & the Other Cambridge <http://web.archive.org/web/20150906001312/http://paulromer.net/wp-content/uploads/2015/08/History-of-Political-Economy-2014-Backhouse-252-71.pdf>

Christopher Bliss: Capital Theory & the Distribution of Income <https://books.google.com/books?id=NzejBQAAQBAJ>

Edwin Burmeister: On the Social Significance of the Reswitching Controversy<https://www.jstor.org/stable/24696693>

Joan Robinson: The Production Function & the Theory of Capital <http://theme.univ-paris1.fr/M1/hpe/HPEM1-TD4.pdf>

Joan Robinson: Quotes <https://www.azquotes.com/author/32076-Joan_Robinson>

Joan Robinson: What Are the Questions? <https://www.jstor.org/stable/2722966>

Barkley Rosser: The Legacy of Joan Robinson <https://econospeak.blogspot.com/2016/05/the-legacy-of-joan-robinson.html>

Paul Samuelson: A Summing-Up <https://www.jstor.org/stable/1882916>

Beatrice Sherrier: ‘Having fun re-reading the Solow-Robinson correspondence… <https://twitter.com/Undercoverhist/status/1012901739899576320>

Robert M. Solow: The Production Function & the Theory of Capital <https://academic.oup.com/restud/article/23/2/101/1538444>

Robert M. Solow & Joseph E. Stiglitz: Output, Employment, & Wages in the Short Run <https://www.jstor.org/stable/1879599>

&, of course:

Vernor Vinge: A Fire Upon the Deep <https://books.google.com/books?id=fCCWWgZ7d6UC>

(Remember: You can subscribe to this… weblog-like newsletter… here: 

There’s a free email list. There’s a paid-subscription list with (at the moment, only a few) extras too.)

Get full access to DeLong's Grasping Reality Weblog at braddelong.substack.com/subscribe

Key Insights:

Brad DeLong: “I have one key insight: everyone should subscribe to Foreign Affairs and read Dan Wang’s forthcoming piece…”

Noah Smith: “There are no good models in history for what China is doing…”

Dan Wang: “There are lots of questions about industrial policy that it is very difficult to answer…”

And as always, the last key insight is: Hexapodia!

References:

Ian Cutress: TSMC: We have 50% of All EUV Installations, 60% Wafer Capacity <https://www.anandtech.com/show/16042/tsmc-we-have-50-of-all-euv-installations-60-wafer-capacity>

Ian Cutress: Intel’s x86 Designs No Longer Limited to Intel on Intel: IP Blocks for Foundry, Cores on TSMC <https://www.anandtech.com/show/16575/intels-x86-designs-no-longer-limited-to-intel-on-intel-ip-blocks-for-foundry-cores-on-tsmc>

Ian Cutress: US Charges Huawei for Technology Theft & Violating Sanctions, China Rebukes "Unreasonable Crackdown" <https://www.anandtech.com/show/13911/us-charges-huawei-for-technology-theft-violating-sanctions-china-rebukes-unreasonable-crackdown>

Henry Farrell & Abraham Newman: Weaponized Globalization: Huawei & the Emerging Battle over 5G Networks

Henry Farrell & Abraham Newman: Weaponized Interdependence: How Global Economic Networks Shape Coercion & Surveillance <https://www.dropbox.com/s/cbv95thldv2dzro/%20Post%20Proofreading%20Weaponized%20Interdependence_IS_Submission.docx?dl=0>

Andrei Frumusanu: Intel 3rd Gen Xeon Scalable (Ice Lake SP) Review: Generationally Big, Competitively Small <https://www.anandtech.com/show/16594/intel-3rd-gen-xeon-scalable-review>

Andrei Frumusanu: Apple Announces The Apple Silicon M1: Ditching x86 - What to Expect, Based on A14 <https://www.anandtech.com/show/16226/apple-silicon-m1-a14-deep-dive>

Andrei Frumusanu: The 2020 Mac Mini Unleashed: Putting Apple Silicon M1 to the Test <https://www.anandtech.com/show/16252/mac-mini-apple-m1-tested>

Andrei Frumusanu: TSMC Confirms Halt to Huawei Shipments In September <https://www.anandtech.com/show/15915/tsmc-confirms-halt-to-huawei-shipments-in-september>

Barry Naughton: Growing Out of the Plan: Chinese Economic Reform, 1978-1993 <https://books.google.com/books?id=LzzgQP0BX34C>

Barry Naughton: The Rise of China's Industrial Policy, 1978 To 2020 <https://books.google.com/books?id=1xdezgEACAAJ>

Yingyi Qian: How Reform Worked in China: The Transition from Plan to Market <https://books.google.com/books?id=eKZADwAAQBAJ>

Anton Shilov: ASML Ramps Up EUV Scanners Production: 35 in 2020, Up to 50 in 2021 <https://www.anandtech.com/show/15428/asml-ramps-up-euv-scanners-production-35-in-2020-45-50-in-2021>

Dan Wang: 2020 Letter <https://danwang.co/2020-letter>

&, of course:

Vernor Vinge: A Fire Upon the Deep <https://books.google.com/books?id=fCCWWgZ7d6UC>

(Remember: You can subscribe to this… weblog-like newsletter… here: 

There’s a free email list. There’s a paid-subscription list with (at the moment, only a few) extras too.)

Get full access to DeLong's Grasping Reality Weblog at braddelong.substack.com/subscribe

…have to come from the arc of Asia facing the bullets, because the American century is over… It's possible to be increasingly optimistic about climate change and to recognize that we still have a huge way to go… If you want to see a coral reef other than with your VR goggles, start scuba diving now…

Zeke Hausfather: Climate scientist working on temp records, climate and energy system models. Director of Climate and Energy at The Breakthrough Institute <https://thebreakthrough.org/people/zeke-hausfather>

Global Warming:

We are now at 1.2℃—2.15℉ above preindustrial, with temperature rising at 0.2℃—0.36℉ every decade, with a lot of momentum behind that rise…

Key Insights:

Brad DeLong: ‘Fifteen years ago solar power was going to be burning switchgrass in a closed carbon cycle…. We thought that Nikola Tesla had won the battle of the systems against Thomas Edison because battery technology is  poisonous, corrosive, and incredibly difficult—as opposed to Tesla winning the battle of the system, simply because he was an absolute amazing genius who could make electrons get up and dance in high-power alternating current in ways that should not have been possible. Now we know better…’

Zeke Hausfather: ‘Technology is the sauce: 15 years ago we were talking as if it was this giant trade-off between the economy and and the environment… hat was baked into these climate economics… the entire assumption…. In 2009 solar was $350 a megawatt-hour…. The price of solar has fallen 10 fold. The price of wind has fallen threefold, the price of batteries has fallen tenfold. Do not underestimate the extent to which technology enables…. It's possible to be increasingly optimistic about climate change and to recognize that we still have a huge way to go… even if we have started taking the worst possible outcomes off the table…. We shouldn't give up hope…’

Brad DeLong: ‘The American century is over. The United States has broken so many promises over the past four years. No fraction of the Republican party will commit to being “globalist” ever again. Global political leadership will have to come from the arc of Asia from China through to Pakistan—the six great river valleys of Asia plus the monsoon regions with all their subsistence farmers who are in the frontline and will be taking the bullets of damage from global warming as they need the right amount of water at the right time to live, The minds of these Asian governments will be concentrated over the next 60 years. And when they say “bark “,I think the rest of the world will have no choice but to go “ARF!”

Noah Smith: ‘Everything's downstream from technology. Technology determines the possibilities of politics, the trade-off functions of economics—all the entire terms of debate. And that technology does not fall from the sky. We live not in Ed Prescott world but Paul Romer world, where technology is something that we choose to make. We do not think enough about purposeful making of technologies that changes the game and our constraints…’

Brad DeLong: ‘If you want to see a coral reef other than with your VR goggles, start scuba diving now…’

All: ‘HEXAPODIA!…’

On the Front Lines & Likely to Take the Bullets:

The 2 billion of the global poor who currently live in the six great river valleys plus the monsoon lands of Asia are (a) among those most at risk from global warming, and (b) the object of concern from states—China and India—highly likely to be global superpowers and thus in positions to act come mid-century.

Drone strikes on the coal-fired power plants of countries that do not play ball with China and India? They have every incentive to try to keep the monsoons in the right place at the right time with the right amount of water—plus trying to keep enough but not too much and not too irregular water flows through the Indus, Ganges, Brahmaputra, Mekong, Yangtze, and Yellow Rivers:

References:

Kevin Cowtan & al.: Robust Comparison of Climate Models with Observations Using Blended Land-Air & Ocean Sea-Surface Temperatures: ‘Estimates of recent surface temperature evolution fall at the lower end of climate model projections… a systematic bias in model‐observation comparisons arising from differential warming rates between sea-surface temperatures and surface-air temperatures…. A further bias arises from the treatment of temperatures in regions where the sea ice boundary has changed… 38% of the discrepancy in trend… LINK: <https://agupubs.onlinelibrary.wiley.com/doi/full/10.1002/2015GL064888>

Lijing Cheng & al.: How Fast Are the Oceans Warming?: ’About 93% of the energy imbalance accumulates in the ocean as increased ocean heat content…. Models reliably project changes in OHC… LINK: <https://science.sciencemag.org/content/363/6423/128.summary>

Zeke Hausfather & Glen P. Peters: Emissions: The ‘Business as Ssual’ Story Is Misleading: ‘Stop using the worst-case scenario for climate warming as the most likely outcome—more-realistic baselines make for better policy… LINK: <https://www.nature.com/articles/d41586-020-00177-3?fbclid=IwAR0pNvCUzF92urBZpYgFgcmVB5n5ugvM410Oas3lDA3UWftQ6NZM7OTdOdA>

S. C. Sherwood & al.: An Assessment of Earth’s Climate Sensitivity Using Multiple Lines of Evidence: ’Earth’s equilibrium climate sensitivity per doubling of atmospheric CO2, characterized by an effective sensitivity S… [via] feedback process understanding, the historical climate record, and the paleoclimate record. An S value lower than 2 K is difficult to reconcile with any…. The amount of cooling during the Last Glacial Maximum provides strong evidence against values of S greater than 4.5 K… LINK: <https://agupubs.onlinelibrary.wiley.com/doi/abs/10.1029/2019RG000678>

Zeke Hausfather & al: Evaluating the Performance of Past Climate Model Projections: ‘Climate models published over the past five decades were skillful in predicting subsequent GMST changes, with most models examined showing warming consistent with observations, particularly when mismatches between model‐projected and observationally estimated forcings were taken into account… LINK: <https://agupubs.onlinelibrary.wiley.com/doi/full/10.1029/2019GL0853788>

Noah Smith: Economists Are Out of Touch With Climate Change: ‘Researchers strive for contrarian insights. They should get the science right first… LINK: <https://www.bloomberg.com/opinion/articles/2016-03-14/economists-are-out-of-touch-with-climate-change>

&, of course:

Vernor Vinge: A Fire Upon the Deep <https://books.google.com/books?id=fCCWWgZ7d6UC>

(Remember: You can subscribe to this… weblog-like newsletter… here: 

There’s a free email list. There’s a paid-subscription list with (at the moment, only a few) extras too.)

Get full access to DeLong's Grasping Reality Weblog at braddelong.substack.com/subscribe

…as Leninist, Noah Smith as Burkean. We neoliberals and neoliberal-adjacents need to come up with five significant discrete policies to make the world economy work better to reduce not just extreme but regular poverty over the next generation, rather than rest on fictitious laurels…

Max Roser: “Most people in the world live in poverty. 85% of the world live on less than $30 per day, two-thirds live on less than $10 per day, and every tenth person lives on less than $1.90 per day. In each of these statistics price differences between countries are taken into account to adjust for the purchasing power in each country…”

References:

Robert Allen: Global Economic History: A Very Short Introduction <https://books.google.com/books?id=FrDsDaWycjQC>

James Ferguson: The Anti-Politics Machine: “Development”, Depolitization, & Bureaucratic Power in Lesotho <https://books.google.com/books?id=hgXbebNQ918C>

James Ferguson: Expectations of Modernity: Myths & Meanings of Urban Life in the Zambian Copper Belt <https://books.google.com/books?id=KidSoXDsbg8C>

Jason Hickel: The Divide: A Brief Guide to Global Inequality & its Solutions <https://books.google.com/books?id=o1k_DQAAQBAJ>

Noah Smith: Against Hickelism: Poverty Is Falling, & It Isn't Because of Free-Market Capitalism <https://noahpinion.substack.com/p/against-hickelism>

Karl Polanyi: The Great Transformation: The Political and Economic Origins of Our Time <https://books.google.com/books?id=lje4MgAACAAJ>

Max Roser & al.: Our World in Data <https://ourworldindata.org>

&, of course:

Vernor Vinge: A Fire Upon the Deep <https://books.google.com/books?id=fCCWWgZ7d6UC>

(Remember: You can subscribe to this… weblog-like newsletter… here: 

There’s a free email list. There’s a paid-subscription list with (at the moment, only a few) extras too.)

Get full access to DeLong's Grasping Reality Weblog at braddelong.substack.com/subscribe

…from the rest of coastal East Asia when looked at in comparative context:

Today Noah Smith & Brad DeLong talk about China, the Taiwan Semiconductor Manufacturing Corporation, Wilhelmine Germany before WWI, & other topics. The key insights are: (1) we need to get Dan Wang on this podcast; (2) in the context of coastal East Asia after WWII, it does not look as though China has any special economic development sauce—it’s just so huge—(3) China’s land-policy slowdown of migration to the coast has made its economic development significantly slower, (4) Barry Eichengreen with his theories of middle-income growth slowdown looks very wise, and (5) hexapodia!

Regional Income Levels in China Today:

The Coast-Interior Divergence:

China Not That Special in Coastal East-Asian Context—Except for Being Very Large Indeed:

If anything, it is distinguished by its late takeoff:

The Three Chinas:

A 50-Million Malaysia, a 300-Million Thailand, and a 1-Billion Vietnam All Mashed Together:

References:

Kathrin Hille: TSMC: How a Taiwanese Chipmaker Became a Linchpin of the Global Economy <https://www.ft.com/content/05206915-fd73-4a3a-92a5-6760ce965bd9>

Barry Naughton: Growing Out of the Plan: Chinese Economic Reform 1978-1993 <https://www.google.com/books/edition/Growing_Out_of_the_Plan/LzzgQP0BX34C>

Noah Smith: China Is Very 20th Century <https://noahpinion.substack.com/p/china-is-very-20th-century>

Noah Smith: China Just Isn’t Very Popular <https://noahpinion.substack.com/p/china-just-isnt-very-popular>

Noah Smith: Invincible Empire?: ‘Can China’s Neighbors Resist Its Overwhelming Power? <https://noahpinion.substack.com/p/invincible-empire>

Joe Studwell: How Asia Works: Success & Failure in the World’s Most Dynamic Region <https://www.google.com/books/edition/How_Asia_Works/dNs33Q1cAX0C>

TSMC: TSMC <https://www.tsmc.com/english>

&:

Vernor Vinge: A Fire Upon the Deep <https://books.google.com/books?id=fCCWWgZ7d6UC>

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In the last resort, the the way the government budget constraint balances itself is through the fiscal theory of the price level: levying this inflation tax on holders of money balances, redistributing wealth away from those who have nominal assets to nominal debts, and imposing a large cognitive-load tax on doing your economic calculation arithmetic. That makes this a lousy tax to impose. Larry and Olivier think we are heading down the road toward a world in which, because Republicans will not allow taxes to be raised, this lousy inflation tax will be levied unless Democrats gird their loins and prepare for an eventuality in which they sober-eyed recognize the costs to real people of letting the government budget constraint balance itself via the inflation tax…

Background:

References

Olivier Blanchard: In Defense of Concerns Over the $1.9 Trillion Relief Plan <https://www.piie.com/blogs/realtime-economic-issues-watch/defense-concerns-over-19-trillion-relief-plan>

Wendy Edelberg & Louise Sheiner: The Macroeconomic Implications of Biden’s $1.9 Trillion Fiscal Package <https://www.brookings.edu/blog/up-front/2021/01/28/the-macroeconomic-implications-of-bidens-1-9-trillion-fiscal-package/>

Neil Irwin: Move Over, Nerds. It’s the Politicians’ Economy Now <https://www.nytimes.com/2021/03/09/upshot/politicians-not-central-bankers-economy-policy.html>

Lawrence H. Summers & Paul Krugman: A Conversation with Lawrence H. Summers & Paul Krugman <https://www.youtube.com/watch?v=EbZ3_LZxs54>

Claudia Sahm: A Big Fiscal Push Is Urgent, The Risk of Overheating Is Small <https://www.ineteconomics.org/perspectives/blog/a-big-fiscal-push-is-urgent-the-risk-of-overheating-is-small>

Larry Summers: The Biden Stimulus Is Admirably Ambitious. But It Brings Some Big Risks, too <https://www.washingtonpost.com/opinions/2021/02/04/larry-summers-biden-covid-stimulus/>

&:

Vernor Vinge: A Fire Upon the Deep <https://books.google.com/books?id=fCCWWgZ7d6UC>

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For 200 years—from 1800 to 2000—first the Industrial Revolution Age and next the Modern Economic Growth Age rolled forward, bringing previously unimaginable wealth to the global north. And the global south fell further and further behind. Don’t get us wrong—life expectancy, nutrition standards, and material well-being in 2000 were all much higher in the global south in 2000 than in 1800. But the proportional gap vis-a-vis the global north had grown to staggering and awful proportions that were a scandal, a disgrace, and a crime. But since 2000 the worm may have turned: now it looks as though the global south—virtually the entire global south—is now “converging” and catching up to the global north.

References:

William Baumol (1986): Productivity, Convergence, & Welfare: What the Long-Run Data Show <http://piketty.pse.ens.fr/files/Baumol1986.pdf>

J. Bradford DeLong (1988): Productivity, Convergence, & Welfare: Comment <https://www.jstor.org/stable/1807174>

Paul Krugman (1991): _ Increasing Returns and Economic Geography_ <https://pr.princeton.edu/pictures/g-k/krugman/krugman-increasing_returns_1991.pdf>

Lant Pritchett (1997): Divergence, Big Time <https://www.econ.nyu.edu/user/debraj/Courses/Readings/Pritchett.pdf?seq=14>

Masahisa Fujita, Paul Krugman, & Anthony J. Venables (1999): The Spatial Economy: Cities, Regions, & International Trade<https://mitpress.mit.edu/books/spatial-economy>

Alberto Alesina, William Easterly, & Janina Matuszeski (2009): Artificial States <https://wcfia.harvard.edu/files/wcfia/files/alesina_artificialstates.pdf>

Joe Studwell (2013): How Asia Works: Success and Failure In the World's Most Dynamic Region <https://books.google.com/books?id=dNs33Q1cAX0C>

Noah Smith (2021): _All Futurism is Afrofuturism <https://noahpinion.substack.com/p/all-futurism-is-afrofuturism>

Dev Patel, Justin Sandefur, & Arvind Subramanian (2021): The New Era of Unconditional Convergence <https://www.cgdev.org/sites/default/files/new-era-unconditional-convergence.pdf>

Michael Kremer, Jack Willis, & Yang You (2021): Converging to Convergence <https://scholar.harvard.edu/yangyou/publications/converging-convergence>

Noah Smith: Checking in on the Global South: ‘Developing countries are catching up, but not evenly… LINK: <https://noahpinion.substack.com/p/checking-in-on-the-global-south>

Twirlip of the Mists: Hexapodia as the Key Insight<http://web.hexapodia.org/>

Vernor Vinge: A Fire Upon the Deep <https://www.amazon.com/Fire-Upon-Deep-Zones-Thought-ebook/dp/B000FBJAGO>

Vernor Vinge: A Deepness in the Sky <https://www.amazon.com/gp/product/B002H8ORKM>

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Mike Konczal: Freedom From the Market: America’s FIght to Liberate Itself from the Grip of the Invisible Hand <https://books.google.com/books?id=0aDLDwAAQBAJ>

Konczal says that it is only today that “glib libertarians” purveying “fantasies” are trying to make us forget “that free programs and keeping things free from the market are as American as apple pie…” One of the best passages in the book is where he notes the connection between the Fight for $15 minimum wage campaign and human freedom: “Service sector workers demanding a $15 minimum wage and a union… have already won huge victories [with] ideas about how low-wage, precarious work is a form of unfreedom…. The Rev. William Barber noted that ‘it took 400 years from slavery to now to get from zero to $7.25 [an hour]. We can’t wait another 400 years’ to get to $15… Ultimately, if all you can say in response to the ills of society is “the market giveth,  the market taketh away, blessed be the name of the market…” you have very little to say indeed. Konczal quotes Oliver Wendell Holmes’s fear and alarm that his fellow justices on the Lochner Supreme Court were, in their “willingness to use a very specific understanding of economics to override law, writ[ing] a preferential understanding of economics into the constitution itself…” in a fundamentally illegitimate and societally-disruptive way. But a better maxim is: “The market was made for man, not man for the market”.

Enthusiastically Reading: Mike Konczal: Freedom From the Market 

<https://www.icloud.com/pages/0qngUKWzJT3-FHnxHh2HH_M8w> <https://github.com/braddelong/public-files/blob/master/delongtoday-konczal-freedom-from-the-market-2021-02-18.pdf>

<https://drive.google.com/file/d/1ih_qxIByRCpwlu76BTjTOF_jP9XI5haw/view?usp=sharing> 

DeLongTODAY 4182 words 35:11 2021-02-19 :

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