Month: September 2023

In Zeke Faux's new book, Number Go Up, Sam Bankman-Fried explains how cryptocurrency works:

A day before the start of the Bahamas conference, Bankman-Fried had all but admitted that much of his industry was built on bullshit. During an interview on Bloomberg’s Odd Lots podcast, the columnist Matt Levine asked a straightforward question about a practice called yield farming. As Bankman-Fried attempted to explain how it worked, he more or less laid out the how-to of running a crypto pyramid scheme.

“You start with a company that builds a box,” Bankman-Fried said. “They probably dress it up to look like a life-changing, you know, world-altering protocol that’s gonna replace all the big banks in 38 days or whatever. Maybe for now actually ignore what it does — or pretend it does literally nothing.”

Bankman-Fried explained that it would take very little effort for this box to issue a token that would share in the profits from the box. “Of course, so far, we haven’t exactly given a compelling reason for why there ever would be any proceeds from this box, but I don’t know, you know, maybe there will be,” Bankman-Fried said.

Levine said that the box and its “Box Token” should be worth zero. Bankman-Fried didn’t disagree. But he said, “In the world that we’re in, if you do this, everyone’s gonna be like, ‘Ooh, Box Token. Maybe it’s cool.’”

In other words, a guy at the center of crypto hype was not only more cynical about crypto than even I am, he was perfectly willing to admit it in public.

From crypto to Donald Trump, it's remarkable how eager people are to be bullshitted. They're so eager that it does no harm to explicitly announce that you're bullshitting them. Neither crypto enthusiasts nor Trump fans care. In fact, they revel in the bullshit. The more the better.

I don't think this is a new feature of American culture. Quite the contrary. It just happens to be more glaringly obvious than usual at this nano-moment in history.

Was our pandemic stimulus too big? Paul Krugman says yes, but doubts it would have made much difference if it had been smaller.

I'm not sure I agree. Total stimulus amounted to roughly $6 trillion. The Obama stimulus package during the Great Recession was around $1 trillion. I think it's safe to say that the Obama stimulus was considerably too small while the COVID stimulus was probably too big. However, the part that was too big wasn't the Biden stimulus that roused the wrath of Larry Summers. It was the initial $3.5 trillion stimulus from the CARES Act passed in March 2020:

Right after this stimulus we went through a manic expansion: three quarters out of five above 6% GDP growth and total growth for the period of 5.4% (annualized). It was this growth that sparked the big inflationary bubble in 2021-22.

And there's evidence that this level of stimulus wasn't necessary. The targeted programs were probably fine (mostly), but the broad check-writing and excessive unemployment benefits probably weren't. The two together likely could have been cut by half a trillion dollars without doing any real damage to workers affected by the pandemic. State and local aid was probably also excessive, as demonstrated by their overflowing coffers in 2021. Finally, business aid could have been more carefully rolled out. Altogether, the CARES Act probably could have been $700-800 billion less with no damage done and an economy growing at 3-4% instead of 5+%.

That's my amateur take, anyway. A smaller CARES Act would have still been as helpful as it needed to be, but would have stimulated more normal growth and a bit less inflation. How much less? I don't know. Maybe 2-3 percentage points?

It's hard to draw firm conclusions because pandemic inflation is fundamentally different than ordinary inflation. Still, even though the supply side of things was unusual (caused by product shortages due to COVID), we still wouldn't have had any inflation if we'd skipped the stimulus entirely and allowed incomes and consumption to decline. It was our determination to keep people whole that produced stable consumption desires in the face of product shortages, leading to inflationary pressure.

My guess is that a stimulus sufficient to address a recession is almost always going to produce some unwanted inflation. We just don't have the capability to fine tune things precisely enough to avoid it, and it's better to err on the side of maintaining growth even if that risks more inflation than we'd like. I like the tradeoff we made for COVID (strong growth, too much inflation) way more than the tradeoff we made for the Great Recession (slow growth, normal inflation).

I know that you probably get tired of hearing me whine about innumeracy in the media, but every time I think I'm out they pull me back in. Here is the Guardian today:

Global cases of early onset cancer increased from 1.82 million in 1990 to 3.26 million in 2019, while cancer deaths of adults in their 40s, 30s or younger grew by 27%. More than a million under-50s a year are now dying of cancer, the research reveals.

Sigh. The population of the world has grown by about 50% since 1990, and that puts a wee bit different spin on this. Here's what things look like in the original paper the headline was pulled from. It's the cancer rate for the young (ages 15-49) per 100,000 population:

The incidence rate of all cancers in the young went up a bit in the early '90s but since then has been flat among men and nearly flat among women. During the same period, the death rate from all cancers has plummeted by 20% among women and 25% among men.

I almost don't blame the Guardian for ignoring rates since the researchers themselves used raw numbers almost exclusively in their paper. You have to trudge through to page 7 before they briefly mention cancer rates, and even then they don't provide any numbers. If it weren't for those charts, I don't think rates would show up anywhere in the paper. That's bad scholarship.

POSTSCRIPT: You might also be interested in cancer incidence and death rates among the young by country. Here it is:

The death rate in the US is pretty low, but the incidence rate is astronomic. That might be due to actual higher cancer rates or to more widespread screening among the young.

And what's up with the Solomon Islands?

Here's the latest from the Washington Post:

Wait. Pickleball shoes?

This is a skipper butterfly photographed in the bright midday sun in our front yard.

Rachel Cohen asks:

Is public school as we know it ending?
Private school vouchers lost a lot of battles, but they may have won the war.

Here's the growth of vouchers over the past 30 years:

You can interpret this in two ways. First, after three decades vouchers still account for only about one-half of one percent of all school enrollment. Second, voucher use has tripled over the past ten years.

However, even if you assume the worst—namely that this tripling continues unabated—it still only gets us to vouchers accounting for 3% of school enrollment by 2040. And even that's pretty unlikely when you look at school enrollment more generally: public school enrollment has steadily risen from 88% of all students to 90% of all students over the past few decades. There's not much sign that public schools are in danger of extinction.

Last year a federal court told Alabama that its congressional map was racially gerrymandered and "it's not close." They ordered the legislature to redraw its map so it would include two majority Black districts instead of one, and the Supreme Court upheld the ruling earlier this year.

Republicans in Alabama responded very simply: they told the court to go fuck itself and redrew the map with—again—only one majority Black district:

Alabama Republicans admitted they consulted with US House Speaker Kevin McCarthy in a bid to keep the seat red. “I did hear from Speaker McCarthy,” said state Sen. Steve Livingston (R), who sponsored the new map. “It was quite simple. He said, ‘I’m interested in keeping my majority.’ That was basically his conversation.” Alabama’s Republican governor Kay Ivey applauded the legislature for defying the federal courts. “The legislature knows our state, our people and our districts better than the federal courts or activist groups,” Ivey said.

Ivey sounds just like Southern governors in the '50s and '60 confronted first with school desegregation and then the Civil Rights Act. They had very similar responses to federal court orders.

Today the federal panel hearing Alabama's case, like those older courts, finally declared it had had enough. They threw out Alabama's map and appointed a special master to take it out of the legislature's hands and draw one that was legal.

I often wonder if Chief Justice John Roberts harbors any private misgivings over gutting the Voting Rights Act in Shelby County v. Holder. In the ten years since, with preclearance no longer required, he's seen state after Southern state—North Carolina, South Carolina, Georgia, Alabama, Louisiana, Florida—revert almost instantly to its racist roots. The proposition that 50 years had passed and there was no longer good reason to keep these states under close watch is obviously in tatters.

Shelby is one of the worst Supreme Court decisions of the past century. Its reasoning was specious from the start, and time has only confirmed how arrogant Roberts and his colleagues were to cavalierly overturn a law that had been reauthorized almost unanimously by Congress only seven years earlier. Do they ever regret what they did?

The New York Times notes today that Medicare spending has flattened out over the past decade. They say that no one knows why its spending growth is now so low, but I'd put it differently. Here is medical inflation over the past 50 years:

The growth of medical spending has not always been sky high. In fact, for most of our history it grew only modestly more than overall inflation. It was only for a 15-year period between about 1983 and 1997 that medical inflation was high, and since then it's reverted to its historical average of 1-2% above overall inflation. In the past few years it's actually been lower than overall inflation.

So the way I'd put it is: Why did it take so long for Medicare spending to slow down? It should have started to flatten around 2000, but instead it kept rising all the way until 2010.

In any case, this is the basic reason for the flattening. There are other factors too, including policy changes under Obamacare, but the big underlying cause of the recent good news for Medicare is that there's been recent good news for all of health care.

Dean Baker pointed me today to a very peculiar chart:

Why peculiar? According to the Conference Board, job satisfaction declined steadily and by a large amount for more than 20 years from 1987-2010. Then it abruptly turned around and has risen steadily and by a large amount for the past 12 years from 2010-2022.

Why would this be the case? Job satisfaction seems to have nothing to do with recessions and nothing much to do with economic conditions in general. It wasn't improved by the dotcom boom and it wasn't hurt by the COVID pandemic. It just motored along.

Right now, job satisfaction is allegedly at its highest point in 35 years. This isn't because of Bidenomics or Trumpenomics or the Great Resignation or remote work or any of that. We've just been getting happier with our jobs every single year since 2010.

Why?

POSTSCRIPT: I should mention that Gallup's poll of job satisfaction is basically dead flat for this entire period. So maybe there's something wrong with the Conference Board's methodology? Or with Gallup's?

Here in California, state senator Aisha Wahab has introduced a bill to add caste to the list of groups protected from discrimination. It was subsequently watered down thanks to efforts from two members of the Assembly, Evan Low and Alex Lee. All three represent Silicon Valley, where nearly every immigrant Indian hails from one of the upper castes—mostly Brahmin or Kshatriya:

The affair has had repercussions for Wahab in her heavily South Asian district. It’s become a bitter lesson in the pitfalls of wading into nuanced cultural issues in an ever-more diverse nation.

....Lee’s office, which typically logs about 10 constituents providing a stance on a bill, received over 600 messages on SB 403. Just 26 were in support, according to a spokesperson. Low said that the ratio of opposition to support was “99 to 1.”

Oh please. Fuck your nuance. Everybody knows how this works:

Indians will not ask outright what caste you are, as it’s seen as overly discriminatory, but they use more subtle methods to identify your place in the caste structure. “Sometimes they ask, ‘Are you vegetarian?’ If you say yes, they ask are you vegetarian by birth or by choice, before getting into which village you come from, because sometimes the village gives up your caste,” Sam said.

The result is just what you think it would be for lower caste engineers like Benjamin Kaila:

In more than 100 job interviews for contract work over the past 20 years, Kaila said he got only one job offer when another Indian interviewed him in person. When members of the interview panel have been Indian, Kaila says, he has faced personal questions that seem to be used to suss out whether he’s a member of an upper caste, like most of the Indians working in the tech industry.

As for the 99 to 1 opposition to Wahab's bill, I imagine you could have gotten something similar for a civil rights bill in Alabama in 1960. It doesn't mean the bill is bad. It means that caste bigotry is almost universal in Silicon Valley.