Author: Kevin Drum

Here's an odd story that popped back to mind recently. It happened one day in seventh grade when my English teacher decided to hold an impromptu spelling bee. A classmate and I picked the teams, and after a few picks my teacher blurted out, "Are you trying to lose?"

I wasn't, but for some reason I had the idealistic notion that a lot of the bad students were actually pretty bright underneath their facades of indifference. So I picked them. Needless to say, it turned out I was wrong and we got walloped.

Anyway, Trump's cabinet choices triggered this old memory. I have a feeling Trump is going to learn that under their clownish facades, all these guys really are clowns. They're going to get walloped too.

Congratulations to Shannon Rowbury! She just won the 1500 meter bronze medal . . .

. . . in the 2012 Olympics.

She placed sixth in the actual race, but moved up to fourth when the top two finishers were disqualified for doping and then to third when yet another was DQed. But why did it take 12 years to figure this out?

I don't know how big a deal this is, but in the aftermath of the Trump election economic uncertainty has reached its highest level since the index began 40 years ago:

There have actually been a few single-day spikes higher than the current level, but the difference is that today's reading is the result of a steady rise since Election Day:

This is a volatile index. By Thanksgiving it might be back to normal. Then again, it might not be.

And it could matter. Here are the findings from the paper that originated the index:

We find that policy uncertainty raises stock price volatility and reduces investment and employment in policy-sensitive sectors like defense, healthcare, and infrastructure construction. At the macro level, policy uncertainty innovations foreshadow declines in investment, output, and employment in the United States.

You have been warned.

Here's a helluva chart:¹

Both elite private universities (Harvard, Stanford, etc.) and elite public universities (Berkeley, U Michigan, etc.) got most of their students from affluent families up until World War II. After that the GI Bill identified smart but poor teens who could benefit from an elite education, and the number of kids from upper income families declined.

But by the end of the '70s, those kids were all high income too and started sending their kids to elite colleges. By now we've done such a good job of finding and rewarding smart kids that there are hardly any left among poorish families. So we're back where we started.

¹It comes from a new paper, "The G.I. Bill, Standardized Testing, and Socioeconomic Origins of the U.S. Educational Elite over a Century." The authors performed a truly stunning bit of data collection to get the results they did.

A few days ago I read an interview with Sherrod Brown about why he lost his reelection race in Ohio this year. My answer would have been that Ohio has been getting redder for years and it finally caught up with him. A gazillion dollars of crypto money opposing him didn't help either. But Brown himself kept saying that people were still pissed off about NAFTA.

Brown knows Ohio better than me, but I'm skeptical. NAFTA passed 30 years ago and had virtually no effect on jobs. We lost a few and gained a few. In particular, if you look at manufacturing jobs they're dead flat for the entire decade of the '90s—including in Ohio.

But you know what did cost us lots of jobs? In May 2000 Congress approved permanent normal trade relations with China, which gave manufacturers the confidence to move factories offshore without fear that every little trade spat would ruin their production. Within only a few months manufacturing employment began to plummet:

Relative to overall employment, manufacturing crashed by 31% in just nine years. That's a little more than five million jobs—about 400,000 of them in Ohio. This didn't end until 2010, which is still a while back but not nearly as far back as NAFTA. What's more, the impact of the China shock is still evident today in midsize towns that a lost a single big factory and have never entirely recovered.

I supported PNTR for China and I probably still would today. But there's no question that it hurt a lot of blue-collar workers and didn't accomplish its goal of liberalizing China and turning it into a normal trading partner. It's hardly any wonder that lots of blue-collar workers still resent people like me over this.

CNN says inflation is skyrocketing in Russia:

Butter, some meats, and onions are about 25% more expensive than a year ago, according to official data.... Inflation is being driven by the rapid rise in wages as the Kremlin pours billions into military industries and sends millions of men to fight in Ukraine.

Hmmm. "Some" meats. And onions. OK. But what's the actual overall inflation rate?

Inflation is good and high in Russia. But it always is. The current spike is only the 7th biggest since 2002. Ditto for the food spike. And it seems like they both might have peaked three months ago. I have a feeling the Russian people aren't going to stage a revolt over this.

Maybe I'm guilty of not paying attention, but lately I've noticed there's (apparently) considerable pushback to the notion that human sex is binary. But it is: Women have the capacity to produce eggs and men to produce sperm. At a biological level, that's pretty much all there is to it despite the existence of a few very rare chromosomal disorders.

Gender is a whole different thing. In modern use, gender refers to a person's preferred expression of gender stereotypes, which can vary wildly and don't always align with biological sex. That's where we get the panoply of trans, questioning, genderfluid, agender, etc. etc.

With apologies for my possible obtuseness, what's the point of fighting against the reality of binary biological sex? It doesn't have any impact one way or the other on society's acceptance of gender existing on a spectrum. Does it? Help me out here.

I had a hamburger for lunch today! It was good!

Well, it was OK. My taste buds aren't 100% back yet. I'd say maybe 80%. By next week I should be fully recovered from this horror show.

SILVER LINING DEPARTMENT: I've dropped 20 pounds over the past six weeks. I'm now merely overweight, not obese, in the unlikely event I can keep the weight off.

You've seen the exterior of Stephansdom in Vienna, now it's time to see the interior.

Here's the current overall valuation of the stock market:

This is the value of all stocks compared to expected earnings over the coming year. I've grayed out the post-pandemic surge, which was mainly a statistical artifact, in order to give you a better idea of how today compares to historical levels.

As you can see, the market is valued way over its average and is now at its second-highest level in decades. The only higher level was at the height of the dotcom frenzy, which lasted only a couple of years before plummeting.

Note that this is effectively adjusted for inflation since it's relative to growing corporate profits. There's no special reason it should change very much at any time aside from good old animal spirits. It's vanishingly unlikely this bull market will continue much longer, and when it falls it will probably lose upwards of a third of its value.