Cats, charts, and politics
This is the Sandy Bottom Nature Park near Newport News, Virginia. I got out here to stretch my legs and got a couple of good pictures out of it. This one is an ordinary little marsh, but with lovely shadows because it was taken early in the morning.
The war to become Donald Trump's heir continues apace. Here is Texas:
Employees at the Texas Department of Public Safety in June received a sweeping request from Republican Attorney General Ken Paxton’s office: to compile a list of individuals who had changed their gender on their Texas driver’s license and other department records during the past two years....“We won’t need DL/ID numbers at first but may need to have them later if we are required to manually look up documents.”
Here is Florida:
Florida will hold the medical establishment accountable by:
• Creating a grand jury to investigate mRNA shots & Big Pharma
• Investigating cardiac-related deaths tied to the mRNA vaccine
• Forming a Public Health Integrity Committee to oversee the medical establishment— Ron DeSantis (@GovRonDeSantis) December 13, 2022
Today, Governor Kristi Noem signed Executive Order 2022-10, which bans the Chinese social media platform TikTok for state government agencies, employees, and contractors using state devices....“South Dakota will have no part in the intelligence gathering operations of nations who hate us,” said Governor Kristi Noem. “The Chinese Communist Party uses information that it gathers on TikTok to manipulate the American people, and they gather data off the devices that access the platform.”
¿Quien Es Mas Condescendiente?
Tyler Cowen links today to a thread about California from a guy named Tiago Forte. After reading it, what I wanted to ask was, Has this guy ever actually talked to a Californian? Luckily I did a teensy bit of due diligence first and learned that he grew up in Orange County; went to college at Cal State San Diego; and currently runs Forte Labs, which is based in Long Beach. So I guess he's talked to a Californian or two.
Still, where does this kind of thing come from?
As U.S. hegemony is fading, California's cultural hegemony is only growing stronger as money pours into media and tech. The U.S. can now be seen as a thin administrative shell surrounding its richest and most influential state, on which it parasitically depends.
Um, OK. Please continue:
As an article of faith, Californians deeply believe this is the best place to live and the highest achievement of modern civilization.
~20% of Americans were raised in a religious household and leave it later in life....Taking religion's place as a source of meaning, purpose, community, and ritual are various ideologies: Mindfulness/yoga, tarot/astrology, social progressivism, LGBTQ+, wellness/self-care, online communities like Reddit & the Rationalist community, new age spirituality.
....What do all of these have in common? They were all created, incubated, or popularized largely in California.
California is the best place to live—though this is mostly because of great weather. Aside from that, it's still pretty great as long as you're middle income or better. It has a top notch university system. A thriving job market. Lots of square mileage for solar and wind farms. Three of the ten biggest cities in the country. Lots of strong industries, including tech, Hollywood, agriculture, tourism, and even aerospace.
But this is too mundane, so Forte defines the entire state as a raging conflict between Social Justice Culture (SJC) and Silicon Valley Utopianism (SVU). What's more, you must choose. You're either one or the other:
With all this in mind, Elon's purchase of Twitter isn't just a business transaction. It represents a hostile takeover by the SVU of one of SJC's most sacred sites – as if the Palestinians occupied the Temple Mount and began using it as a base of operations.
Damn. I'd guess that no more than 1% of Californians have any idea that SVU even exists. SJC is obviously more well known, but I'm not sure I'd even put California as its epicenter, let alone its biggest practitioner. If I had to pick the spot where it's strongest, I'd guess it would be Harvard and its Northeastern environs.¹ From there it spread across the country and was adopted in every college town and lefty state, including California.
But it's a funny thing. SJC is often the source of battles in the legislature or in city councils or university groups, but in ordinary life I almost never come across it. It's just a non-issue.
I gather, ironically, that it is a big deal in Silicon Valley, the same place that spawned SVU. So if I were going to say anything about this at all, I'd say that the unique feature here is not California, but Silicon Valley, which combines SJC, SVU, and an obsession with money into a single febrile statelet cut off from the rest of us. But that statelet is too busy doing its own thing to bother trying to spread ideologies of any kind. Outside of the ridiculous marketing presentations about potential market sizes—a feature of businesses worldwide—they are entirely inward-looking. And since it's fundamentally a nerd-based culture, they love to carry on dorm room brawls over everything, with the most trivial subjects getting the most attention.
I don't think there's much question that Elon Musk's turn to the dark side started with his annoyance over wokeism at his Bay Area Tesla plant. But in reality it was never about wokeism except in his own mind. He was mostly annoyed by unions; by the state of California actually expecting him to obey the law; and by employees wanting to put a stop to garden variety racism. What's worse, at the same time all this was steadily feeding his resentments, he developed a cult of admirers who validated his every utterance and egged him on against the critics.
So he moved Tesla's headquarters—i.e., its highest paid executives—to Texas, which doesn't have a personal income tax. Ka-ching! There he stewed and stewed over how California had treated him—him! the richest man in the world!—and eventually fell down the rabbit hole of anti-wokeism. This isn't really surprising. He was primed and ready, and there's no better place in the world to hate California and wokeism than Texas.
He's pretty far down the rabbit hole now, and who knows how it will turn out? Despite his high-profile failures, there's not much question that Musk is a brilliant businessman with a stunning number of successful ventures to his name, including PayPal, Tesla, Tesla Energy (solar and batteries), SpaceX, Starlink, and OpenAI.
But what has he done lately? Will Twitter be his greatest victory or the final leap down the rabbit hole? At the moment it looks like Musk's resentments have gotten the best of him and he's hurtling down the rabbit hole at maximum warp. Teaming up with the MAGAnauts is incomprehensibly stupid from a business perspective, but I guess he can't help himself anymore. I recommend a nice big prescription of Zoloft.
¹People often think of California as ground zero of weirdo lefty culture, but that's a mistake. California has always been a unique blend of two cultures: weirdo counterculture stuff and hardheaded business attitudes descended from the wave of Midwestern migrants who populated the state in the early 20th century.
Ronald Reagan was a famous product of this cultural fusion, and you can't really understand him unless you come to grips with it. Because it truly is a fusion, not a war. Hollywood was once the leading example of this fusion, but today it's Silicon Valley, whose residents are simultaneously the flakiest of the flaky and the greediest of the greedy. It's a helluva powerful combination.
Today I learned, 25 years after the fact, that Princess Diana wasn't killed by swarms of irresponsible paparazzi in that Paris tunnel. The paparazzi were there, of course, but apparently they weren't doing anything way out of the ordinary. Diana died because her chauffeur for the evening was intoxicated; had prescription drugs in his system; and lost control of the car while driving at twice the speed limit.
I gather that this is common knowledge, but somehow I've managed never to hear it. I just vaguely thought the crash was due to the paps even though their share of the fault, according to multiple investigations, was probably pretty small.
I wonder how many people are going to chime in to tell me that I'm totally wrong and all of the official inquests were completely corrupt? Let's find out.
Earlier this morning I put up a chart showing what inflation looks like if you use a better estimate of rent than the one that BLS uses. I thought this could bear some explanation, so here are two estimates of rent inflation:
The official BLS estimate has continued to rise throughout 2022 even though everyone knows that rents have cooled off. This is because BLS uses a methodology that (a) combines new and existing rents and (b) is at least six months out of date because they conduct rent surveys only twice a year.
The Zillow index, by contrast, is a simple estimate of asking prices for new rentals over the past month. It shows that rent inflation peaked in mid-2021, fell for six months, and then started falling again in June. As of November, rent inflation was about zero.
To account for this, Jason Furman has constructed a measure of core CPI that uses a more accurate index of current rents.¹ The idea behind this is to estimate core CPI with current figures, not old ones:
I'll confess that Furman's estimate strikes me as being suspiciously similar to those old right-wing efforts to "unskew" polls using all sorts of sketchy assumptions. In order to play fair and keep myself honest, I generally like to use the same measurements all the time even if they aren't perfect. Still, the rent figures in the inflation basket are widely known to be defective, and even the BLS is investigating ways to improve things. I suspect that Furman's numbers really are a better estimate of core inflation right now.
So that's the explanation. The core inflation figure you'll see in headlines is 6.0%. The core inflation figure if you measure monthly instead of yearly is 2.4%. The core inflation figure if you use better rent figures is -1.2%. Take your pick.
¹Furman uses both Zillow and Apartment List to construct his rent index, but the Apartment List numbers aren't seasonally adjusted and I don't know how to do seasonal adjustments. So I only showed the Zillow figures in the top chart.
This is a woman sketching the scenery near the west end of the Île de la Cité, the famous island in the middle of the Seine in the center of Paris. The bridge up ahead is the Pont des Arts, and the dome to its left is the Institut de France.
John Ray is the temporary CEO named to clean up crypto giant FTX after its spectacular collapse last month. He testified before Congress today about the biggest problems he's uncovered so far:
"Loans and other payments" include $1 billion that Sam Bankman-Fried personally received from Alameda, but there was also $2.3 billion for Paper Bird, a company he controlled and had 75% ownership of. This means that FTX—an SBF company—illegally loaned $10 billion in customer deposits to Alameda—also an SBF company—which then turned around and gave $2.7-3.3 billion to SBF. Most of the rest was put into highly leveraged investments, presumably in the hopes of getting lucky and restoring the customer funds before anyone noticed.
This is the FTX story people should be paying attention to. In the end, it's just a drearily familiar high-finance scam dressed up in malaria bed nets.
UPDATE: "Plain old embezzlement." Excellent. I'm glad that John Ray gets it.
New FTX head John Ray III is asked to compare FTX to Enron. “[Enron crimes] were highly orchestrated financial machinations by highly sophisticated people to keep transactions off balance sheets. This (FTX)... isn't sophisticated whatsoever, this is just plain old embezzlement."
— Paul McLeod (@pdmcleod) December 13, 2022
As always, the BLS released figures for average earnings at the same time as the inflation figures. Here are average weekly earnings for all private employees:
Hourly earnings were up 5% for the month (on an annualized basis) but average hours worked were down a bit. The result is an increase in weekly earnings of about 2% after adjusting for inflation.
Average weekly earnings are down 5% since the start of 2021. They've made up a little less than 1% of that since June.
The BLS announced CPI figures for November today, and both the headline rate and the core rate declined substantially:
Shazam! The headline rate is below the Fed's target of 2% and the core rate is damn close. As always, I'm showing month-over-month rates that have been annualized. If you still insist on following the conventional year-over-year figures, they declined to 7.1% for the headline number and 6.0% for the core figure.
If you follow the trendline instead of the monthly figures—which is not a bad idea—inflation dropped to 2.8% for the headline rate and 4.0% for the core rate.
On an added note, shelter inflation rose 7.4%, a figure that's several months out of date. If instead we used more current figures for shelter, then the overall inflation number would be lower than the official figure. Here is Jason Furman's calculation of the core inflation rate if current spot rents are subbed in for the official figures:
Of course, in any given month some items will be flukily high—like shelter—and others will flukily low—like energy, used cars, and medical services in November. Some flukes will go down next month, but other flukes might go up. We'll just have to wait and see.
STANDARD CAVEAT: The big newspapers all reported that inflation was "easing," which is the right take. But they underestimate just how much it's easing because reporters focus on headline inflation and on the useless annual figures. That's precisely the opposite of what they should do. The meaningful data is core inflation measured monthly, and in November it plummeted to 2.4% on an annualized basis. That's noisy data, so don't take it as gospel, but at the same time it's very good news. Core inflation measures the bedrock economy, and this month's figures say the economy is in pretty good shape.
So far, the lame duck Congress has passed:
What's next? There are a few possibilities:
I don't get the sense that ECRA is getting a lot of attention, but it's still in play. I hope it passes. It's a pretty moderate bill with bipartisan support and it's symbolically important even if its concrete reforms are modest.
As for all the budget stuff, I'd guess that the budget itself will get passed at the last minute but a debt ceiling increase won't. This will give MAGAnaut Republicans a shiny toy to play with when they take power in January.
Congress has until December 22 before it recesses—unless Chuck Schumer and Nancy Pelosi decide to play chicken and hold the session open. Tick tock.