Month: November 2024

Is this a joke?

President-elect Donald Trump chose Pete Hegseth, who is a combat veteran and co-host on the weekend edition of “Fox & Friends,” to be his defense secretary.

Hegseth has no defense experience—aside from having lots of opinions. He has no government experience and no experience dealing with the Pentagon bureaucracy. He's never run anything bigger than a broom closet. Even at Fox he's only junior varsity, co-hosting the weekend edition of Fox & Friends.

On the other hand, he sure looks like a cabinet secretary. And he agrees with Donald Trump a lot. I suppose that might be good enough for a press secretary, but heading up the biggest, most complex organization in the federal government? You'd think that even the most servile Republican senators might think twice before letting a Fox talking head run the Defense Department. It's considered a pretty important job in some circles.

This picture was taken on the U6 metro line in Vienna near Thaliastrasse. I don't really know why it appeals to me since there's nothing all that special about it. But maybe that's it. Just an ordinary slice of life on an ordinary day.

Since we seem to be relitigating Joe Biden's ARP stimulus and whether it caused inflation, I want to show you my theory of the case. It will be familiar to most of you.

Apologies for the complicated chart. What it shows is that the first phase of inflation started shortly after the pandemic and was the result of supply shortages plus the $2.2 trillion CARES Act, which kept demand steady. It peaked about 15 months later (red dots). This is a shorter interval than usual because this wasn't a normal monetary inflation, which takes a while to work through the system. It was an external shock, which has an impact fairly quickly.

That took us up to about 8% inflation, and then CRRSA and ARP kicked in.¹ They pushed inflation up to 10% and extended the inflationary period by half a year or so (blue dots).

This is why I say the inflationary surge was almost entirely a result of the pandemic plus CARES. That was responsible for about six points of inflation. CRRSA+ARP was perhaps responsible for another two points for a couple of quarters. This means the (allegedly) excessive size of ARP was responsible for at most one point of extra inflation.

How bad was that? That's a matter of opinion. If inflation had peaked around 8-9% and subsided two quarters earlier, how much difference would that have made? That's genuinely hard to say, but my gut feeling is it would have been fairly minimal.

¹CRRSA is the $900 billion pandemic bill passed a month before Biden took office.

I keep reading that Donald Trump might try to fire Fed chair Jerome Powell, whose term runs through 2026. But what is this based on? Trump himself hasn't said anything, and Powell is steadily lowering interest rates, which is what Trump wants. Nor has Powell put himself on Trump's enemies list by saying something critical about him.

So where is this all coming from? I'm confused.

A friend asked me yesterday if turnout was really down this year. The answer is yes, but it's a bit trickier than it seems.

Turnout was 158 million in 2020 and looks like it will end up around 154 million this year. But 2020 was a big spike year and might not be a fair comparison. My preference for "expected" turnout is to ignore 2020 and instead draw a trendline through 2016. Then extend it through 2024 and see what you get:

That's a drop from the record high of 2020, but not much of one. So even if this is a better way of estimating turnout, 2024 fell short by three million voters. Enthusiasm just wasn't there like it was in 2020, when Donald Trump's antics were fresh in everyone's minds.

I see that Donald Trump has reaffirmed his plan to abolish the Department of Education, so I'll remind everyone yet again that this meaningless. The question is what programs you're going to abolish, and on that score the Department of Education is pretty simple:¹

You've got Pell Grants for working and middle-class college students. You've got Title I grants for elementary and high schools in low-income areas. And you've got money for special ed kids.

Aside from that you've got a hodgepodge of tiny programs: deaf and blind students, historically Black colleges, kids with disabilities, Indian schools, vocational rehabilitation, etc. etc. But the Big Three are all that really matter. Does anyone really want to kill those off? And if not, who cares what the name of the agency that oversees them is?

¹These figures are approximate and don't include government guaranteed student loans. FY24 was a weird year with lots of continuing resolutions and no federal budget until halfway through the year, so it's hard to figure out spending in detail.

If you voted against Kamala Harris—or just stayed home—because you were pissed off about Gaza, I have bad news for you:

Israel’s Finance Minister Bezalel Smotrich welcomed President Donald Trump’s electoral victory Monday, saying that “the time has come” to extend full Israeli sovereignty over the occupied West Bank.

....During Trump’s first term, he said, “we were on the verge of applying sovereignty over the settlements” in the West Bank, “and now the time has come to make it a reality.”

....“Moving forward, I intend to lead a government decision stating that the Israeli government will work with President Trump’s new administration and the international community to apply sovereignty and seek American recognition,” Smotrich said.

Smotrich is one of those religious lunatics who make Netanyahu look moderate, and he's been agitating for annexation of the West Bank forever. So until we hear this from Netanyahu himself, take it with a grain of salt.

Still. It's certainly a sign that Israelis expect Trump to green-light anything they do, without even the annoying bleating they get from Biden about "starvation" and "human rights" and other nonsense. As always, be careful what you wish for.

I ate a bag of potato chips with lunch and they were.......not bad! My salt taste is definitely coming back. Sweet never went completely away, but sour is still nowhere. I tried a pickle and tasted nothing. I'm not sure how to test bitter since I don't really eat any bitter foods.

Anyway, progress.

Jack Herrera has a piece in Politico today about why Democrats lost the Latino vote this year. This is already a tedious genre, but if it's Jack Herrera it's worth a read

First off, it's worth acknowledging that the blowout wasn't as bad as it seems. The biggest losses were in places like Florida and Texas, states so red that Harris never bothered campaigning there. In swing states, where she did campaign, Latino losses were a few percentage points.

That said, no one questions that the shift is real. Herrera says that part of the answer lies with both Biden and Harris adopting tougher border positions this year, but mostly it's the economy:

There’s one powerful variable that explains Latinos’ embrace of Trump more than any other: class. Over 80 percent of Latinos are working class, and an enormous number of them are strivers working manual labor.

OK, let's listen in:

I spoke with Ismael Cardenas, a soft-spoken Mexican immigrant from Michoacán who worked at one of the plants.... Over the last three years, his family had been crushed by inflation and gas prices. Though they had once voted Democrat, they’d stopped believing that the party actually cared about working people like them, no matter how the politicians talked. “What Trump says is what Trump does. If he promises something, he is going to do it,” Cardenas told me.

“That’s it, exactly,” Lira said, jumping in. “Democrats talk so eloquently, but their actions are not good. The way Trump talks may not be nice. I think, at times, he has said racist things. But his actions, his policies are good. And he keeps his promises.”

....Other Trump voters I met in town, however, were much less ideological. Their message, instead, was something like this: Under Biden, there were days I couldn’t afford to fill up my truck with gas; the price of eggs doubled; my rent went up. Entonces, Biden is fired. It’s time for change.

....The morning after the election, I got lunch with Chuck Rocha, a Democratic campaign strategist.... Almost all the men in his family worked at the Goodyear tire factory.... That eventually led him to the Democratic Party, which Rocha joined in 1990, hoping to, as he recently put it, “fight NAFTA, drain the swamp of over-educated rich people in power, stop investing my money in foreign wars and prioritize making things in America again.” Over our table, Rocha raised his eyebrows and asked me, “Who does that sound like today?”

After a Democrat — Bill Clinton — signed NAFTA, thousands of factory jobs moved to Mexico. Rocha and the men in his family all lost their jobs when the Goodyear plant shut down. There’s a similar story in Reading — during Obama’s presidency, a litany of factories, including Hershey and Pepsi, closed their doors for the last time. The hard truth for Democrats is that their problems with Latinos, and their problems with all working class voters, go beyond Trump — these are people who feel they’ve been materially failed by Democrats for a generation.

I think a lot of this shows the power of rhetoric as much as it does reality. There was nothing Joe Biden could do about inflation, for example, so he decided his best bet was to stay quiet about it. But that's not what people want to hear. They want to hear that you're mad as hell and by God you're going to fight it.

Or take NAFTA. Trump has no intention of repealing it. Hell, it was passed by Republicans in 1993 and Trump signed an expansion of NAFTA when he was in office. But that never stopped him from yelling loudly about how unfair it was and promising to do something about it.

Here's how the power of rhetoric works:

What Trump Says	What They Hear
NAFTA is the worst deal ever.	I'll protect American workers from Mexicans.
We'll deport 20 million illegal immigrants.	I'll get rid of the cheap labor that's stealing your jobs.
We'll cut taxes.	I'll cut your taxes.
Inflation is killing us.	I'll never let inflation happen again.
Tariffs as far as the eye can see.	I'll punish China for taking away our manufacturing jobs.

Now, the truth is that (a) although a modest number of factory workers lost their jobs under NAFTA, it was responsible for almost no net job losses, (b) illegal immigrants don't compete for the same jobs as native workers, (c) Republican tax cuts focus almost exclusively on corporations and the rich, and (d) Trump has no influence over inflation. As for (e), China really did take away a lot of manufacturing jobs in the aughts. But tariffs won't bring them back.

But who cares about the truth? I don't even mean that sarcastically, either. People mostly want to know which side are you on? Democrats are keenly aware of this when it comes to gay issues, trans issues, race issues, union issues, and so forth. Did Biden walking a picket line actually help UAW workers get a better contract? Of course not. Did it get a lot of UAW votes anyway? You bet.

For some reason, though, Democrats have long been unable to understand this when it comes to the working class. I don't mean that they disparage working class voters. They don't. But they don't loudly promote their interests either—not economic interests and not cultural interests. A $25,000 tax credit for first-time home buyers? Come on. Nobody understands that. Sex change surgery for trans prisoners? Please.¹

I believe pretty strongly that, in reality, neither party is able to do much for the working class. Biden did a little bit for them by increasing subsidies for Obamacare, but that's probably about as much as any president has done this century. Harris actually came close with her long-term care proposal, and might have made a splash if she had flat-out endorsed Medicare covering all long-term care. But she didn't.

Still, for a variety of reasons, I remain skeptical of the argument that Trump won because of the economy. One reason that gets too little attention is the comparison between Biden and Ronald Reagan. Both faced high inflation, high unemployment, and slack wages, and both presided over an improving economy by the end of their first term. But Biden and Harris presided over a way better economy: inflation at 2.4% compared to 4.2%; unemployment at 4.1% compared to 7.2%; and blue collar wages up 5% over five years compared to down 10%. And yet Reagan won a landslide while Kamala Harris got badly beaten.

Now, that was 40 years ago and times have changed. And you can certainly argue that Biden also presided over the inevitable end of the pandemic goody bag. Still, it strikes me that the evidence suggests economic discontent was more media driven than real. Nothing else really adds up.

All that said, it's still the case that if you want the working class to vote for you, you have to take their side. Even if you're faking it, you still have to do it. Democrats haven't for a long time.

¹You think this is unfair? It's not. Kamala Harris "strongly" supported it of her own free will in 2019 because she thought it would appeal to the college educated lefties that made up her base. And it was official policy under both Obama and Biden.

The Energy Information Administration dropped its latest monthly estimate of solar module shipments a few days ago, so this seems like a good time take to take stock. Here's an extrapolation of where we'll be by 2030 if solar keeps rising at its current rate:

At the current rate of growth, solar capacity will reach about a thousand gigawatts by 2030, which would probably be about half of total demand. Raw cost will drop from 30¢ per watt to 15¢ per watt, producing a levelized cost per kWh less than any other source.

This, of course, assumes that both shipments and cost of solar modules can stay on their exponential paths for the rest of the decade. Fingers crossed.