Reblogged mtxyqmpsfqklt
Clive Barker - Self Portrait, 1995 [Acrylic and Oil Pastel on Paper] Published in Out
Reblogged
From everything I know, inflation and stagnation are completely contradictory things that should never happen together, so how was stagflation an Actual Thing?
Think of the entire economy as a single market. There’s a supply curve, which describes the amount of a good that will be sold at each price, and there’s a demand curve, which describes the amount of a good that will be bought at that price.
Here the amount of the good is the output level in the entire economy. How much of everything is sold? That’s RGDP. And the price is prices across the entire economy. How much is everything worth? That’s the price level, which we track with a broad price index.
The demand curve is downward sloping: there’s less demand at higher prices. The supply curve is upward sloping: they’s more supply at higher prices. And the intersection of those curves describes the equilibrium in the market: the equilibrium output and price level.
That’s a lot like an individual market.
We spend most of our time thinking about demand shocks. If the interest rate rises, the supply of credit contracts. Then there’s less aggregate demand at every price level. That’s a negative demand shock.
A negative demand shock means that the demand curve shifts leftward. There’s less demand at every price level. And where there’s an exogenous demand shock, we move leftward along the supply curve: output falls, and prices fall too. That’s a recession.
But there are supply shocks, too. When resource costs rise, the costs of production rise. When labor costs rise, the costs of production rise. Those are negative supply shocks.
A negative supply shock means that the supply curve shifts leftward. There’s less supply at every price level. And where there’s an exogenous supply shock, we move left along the demand curve: output falls, but prices rise. That’s stagflation.
If supply contracts, output should fall, but prices should rise. That usually happens in wartime. If you’re Germany or Japan in 1944, it doesn’t matter how much you lower interest rates, or how much you pay for the goods you requisition. There’s just not enough supply. Output will fall and prices will rise.
Stagflation happened in the 1970s because resource costs rose. OPEC told us that there would be less supply at every price level. The costs of production rose accordingly. And so output fell and prices rose.
Consumers have strange normative concerns about this sort of thing – consumers have come to expect a certain price for a certain quantity, and everything else is unfair – so the state usually steps in to regulate quantities and prices.
During wartime, authorities ration consumption by quantity, rather than price. The state specifies a maximum amount of a good available for each individual, and specifies a price for the good. That’s inefficient for all the standard reasons, and it creates the same distortions: undersupply, oversupply, mismatch, misinformation, and evasion.
But the individual maximum works towards some distributional norms: individuals will have similar consumption entitlements, their expectations about fair prices will be met, and the poor won’t be priced out of consumption. And the state uses the language of equity: everyone shares the burden.
This sort of rationing can hide these negative aggregate supply shocks, but you can see them in wartime in the United States and the United Kingdom if you look closely enough. And you can clearly see them in places where the state loses power, such as Germany and Japan in 1945.
And that’s where you see stagflation.
This was a good post, very clearly explained!
Reblogged thekimonogallery
iesuuyr-deactivated20210106
Source: Flickr / alexis_num
That article is like "China’s shipbuliding capacity is 230 times greater than America’s and also not even Admiral Yamamoto would have thought a war could be winnable if the supply lines had to stretch to the coast of California". But,
shipbuilding in Japan+Korea together roughly matches China, and they are located on the correct side of the Pacific Ocean. If the U.S. wants to win a war over Taiwan, I think what we should do is off-shore our warship construction also, rather than trying to build them domestically.
Reblogged
The task facing the serious military reformer in 2025 is not actually to look for points of “irrationality” inside the Pentagon that can then be treated with various “quick fixes.” While there is much inside the American national security apparatus that is broken and in need of repair, efforts to do so will come to nothing unless the most basic question of all is answered first: what is the intended point of the U.S. military? Is it to fight wars and physically protect America? Is it to protect the ideological credibility and legitimacy of the current American political class? Is it some possible mix of the two? If you cannot answer which one of these purposes your “fixes” to the military are meant to address, your efforts at reform will invariably be defeated by institutional pressures for which you have no answer. Additionally, “credibility” or “regime legitimacy” are in no way frivolous or unnecessary requirements. In the years leading up to the bankruptcy that sparked the French revolution, the controller-general of finances to Louis XVI consciously did not try to cut back on “frivolous” spending at Versailles, reasoning (probably quite correctly) that cutting this very obvious waste would cost more money than it would save, as it would likely signal to creditors that France had passed the financial point of no return. For the American empire, facing a recruitment crisis, a hollowed out defense industrial base, and looming fiscal ruin, ideological credibility may be just as important as physical capability. Today, the most earnest policy wonk in D.C. finds himself tumbling, like Alice down the rabbit hole, into a strange world where the rules make no sense, and where things are all out of place. Fixes are proposed; panels are held; good, sensible reforms are constantly suggested: yet nothing works, everything keeps getting worse, and there seems to be no way out of the crisis. But the strangeness of this world is all an illusion; an effect of the blindfolds put on by those inside it. To the average American war planner of the early twentieth century, the things that are being spoken of as normal today would have appeared as truly insane. Yet the people inside the Beltway today are no more “mad” than their more confident twentieth-century predecessors; they are simply acting rationally in the context of a very different set of institutional pressures.
Source: americanaffairsjournal.org
Reblogged
Very cute watching Justice Johnson hyperventilate in Osborn v Bank -- "oh no, what if the fedgov starts interpreting contracts? what if -- and this is wild -- it gets involved in wills?"
To be sure, if the act had simply and substantively given the right "to sue and be sued in the circuit courts of the United States," there could have been no question made upon the construction of those words. But such is not the fact. The words are not that the Bank shall be made able and capable in law to sue, &c., but that it shall, "by a certain name," be made able and capable in law to do the various acts therein enumerated. [...] With this qualification, the clause in question will be construed as an enumeration of incidents, instead of a string of enactments; and such a construction is strongly countenanced by the concluding sentence of the section; for, after running through the whole routine of powers, most of which are unquestionably incidental, and needed no enactment to vest them, it concludes thus: "and generally to do and execute all and singular the acts, matters and things which to them it shall and may appertain to do."
tbh, I feel the argument in the dissent is much more convincing than the majority...
it might be convincing if it had said what Johnson says, but it seems to me to say "to sue and be sued, plead and be impleaded, answer and be answered, defend and be defended, in all state courts having competent jurisdiction, and in any circuit court of the United States" in sec. 7 of "An Act to incorporate the subscribers to the Bank of the United States", enacted April 1816
lol, based on this blog post, it sounds like exactly the same thing happened again!
Congress passes a law, it's ambiguous exactly what it means, the supreme court interprets that "based on the context, this clause [is only definitional / is only jursidictional], it doesn't establish a cause of action", Congress decides to override the ruling by passing a new law which inserts more text... into exactly the same context which we now know by precedent doesn't create causes of action!
And then the supreme court has to decide whether to follow their established interpretation, or to honor the incompetently executed intent of the new law...
Kindof ironic that George W. Bush was the one who finally killed the Agreed Framework. Like, his signature foreign policy accomplishments include
- Spending trillions of dollars on a war to keep a dictator from getting weapons of mass destruction
- Going, "eh, whatever, that dictator can have some nuclear weapons"
Reblogged
a lot of what people say about international trade only makes sense if you think that designing chips isn't real work, only fabricating them is; discovering drugs isn't real work, only synthesizing them is; it's real work to make products at the factory, but building the logistics network to ship them to the customer is fake jobs.
In the US we run a trade deficit, which means an inflow of foreign capital, as Krugman explains. I usually hear this explained as the US getting outcompeted in manufacturing, with foreign investment as a sort of side effect. But then, foreign investment in what? Well, a lot of it is in the companies I obliquely referred to above, including Nvidia, Apple, Amazon, which are some of the world's most valuable companies, and the American pharma industry which produced cancer immunotherapy starting around 2010, made cystic fibrosis survivable as of like 2019, mRNA vaccines delivered starting 2020. Like Japan runs a trade surplus and then Masa tries to invest it here, and keeps losing but that's not because there aren't valuable American companies, it's his fault he sold $NVDA. Krugman says valuable American investment opportunities are part of what drives the American trade deficit, rather than the other way around, and these American companies make it seem like that has to be part of the story.
But then I see shit like:
The US, since I have been born, has been coasting. The main product made by the US is the dollar, and it used those manufactured dollars to outsource everything. Most jobs in the US are now basically fake. It’s an economy in which five people stick a pipe in the ground, but that pipe is the fed and the oil was the good will built up over 1870-1970.
1970? I don't know, seems that all this shit I listed is since 1970. I've taken the mRNA vaccines, presumably didn't get as sick as I otherwise would have when I got covid19, also took paxlovid developed by American company Pfizer, shut down the fever. I pay for Claude because it's worth it. I have an iPhone, processor, yes, made in Taiwan, but also, as the label reminds you, designed in California. These were all fake jobs? Do the transistors just arrange themselves to do computations? Do they spontaneously train themselves into a large language model when you plug them in? Paxlovid is manufactured in Europe, but the authors on the paper are Pfizer employees in the US; were they extraneous, fake jobs that could have been cut so we can skip straight to the chemical plant manufacturing... what?
There's something Randian going on here. It's like Marxist logic, all the value is created when the factory worker works the machine. A denial that thinking contributes any economic value.
I think there is an extreme strawman position where the US produces nothing of value which is obviously false: it has a huge domestic market and exports all kinds of things like movies, the high tech stuff you mentioned, even basic commodities like oil, however I don't think mRNA vaccines and iPhone designs are sufficient to account for the huge disparity in trade and I don't think the current flows are sustainable.
first of all the guy whose post I'm mad at isn't a strawman that I created, he's a real guy whose post I read today, and also I see posts like it routinely. Second the trade deficit is what, like a trillion dollars per year? And I listed multiple trilllion dollar companies so just the stuff in my post covers at least a few years of the trade deficit. While we don't create a trillion dollar company every year, actual good American investments doing actual valuable stuff has to account for a lot of it
sorry I didn't mean to suggest it was a strawman position you created, I meant it was an obviously incorrect position (and every obviously incorrect position has multiple adherents on social media that we encounter every day).
accounting for the trade deficit that way is interesting though, it suggests that over a decade the US is handing the world financial assets worth ten trillion dollars, or the value of Amazon, Apple, Microsoft, and Google combined.
Yes, it is interesting. It's good to have an ensemble of explanations imo. Of course the Chinese government robbing their citizens to invest in their export industries has to be a big part of the trade surplus, as I understand Pettis to be saying, but what Krugman's talking about, where good US investments tend to push the US trade deficit higher, has to be making some contribution as well. It may be that one or the other explanation is far more quantitatively significant than the other, but I don't think I can judge that, really, since they both seem to be at least on the right order of magnitude. And as I read about this I'll probably encounter a third plausible-sounding explanation. I think the most interesting thing though is just the conceptual point that accounting identities don't on their own explain anything, and when an economist says that to disagree with them you must not understand some accounting identity, it's bullshit. So its nice to have two economists, Pettis and Krugman, that fundamentally disagree, and yet when people don't believe them they both say it's because nobody understands the balance of trade identity.
right, the accounting identity that X + Y = Z doesn't explain the values of any of these quantities, it only constrains how they can change.
I still think Krugman has it completely backwards though: his explanation suggests that Deng Xiaoping's commitment to reform and opening was somehow downstream of US interest rates despite preceding Reagan, and his argument for why the US runs a trade deficit doesn't explain why it ran a trade surplus in the past when the same conditions applied but China and Japan hadn't industrialised yet.
tbh sometimes when you write stuff like this i wonder if you realize that explaining an increase in exports does not explain a trade surplus. Reform and opening was going to lead to an increase in exports, the question is why it didn't lead to a corresponding increase in imports. I know you have an answer to that, Pettis's answer, but then you write stuff like "so Krugman thinks stuff happening in the US caused Asia to industrialize?" as if Asia industrializing naturally causes a US trade deficit
the reason it didn't lead to an increase in imports is the long list of methods taken to suppress wage growth in China, such that Chinese workers produced more than they consumed and exported more than they imported, starting with currency depreciation.
if China reduces subsidies to industry and Chinese workers earn more of what they produce they will import more, and the US trade deficit will decline.
But I guess, per the discussion above in the thread, that is also not a necessary or sufficient condition? Like, wage suppression in China favors Chinese capitalists over Chinese workers, the capitalists get more profits to reinvest. But if they reinvested them in China that would still not create any trade imbalance, the issue is that they invest in the U.S. as well.
Or conversely, if there was no wage suppression in China and Chinese and American workers were paid exactly the same fraction of the revenue, but American capitalists reinvested it all in America while Chinese capitalists invested part of it in China and part of it in America, then we'd still get a trade imbalance.
I guess the link is that if Chinese capitalists have lots of profits they more easily exhaust domestic investment opportunities and start to look abroad, but it's not a direct link.
The substance he discovered, as well as being a potent insecticide, was enormously toxic to humans; hence, it was named tabun, to indicate that the substance was 'taboo' (German: tabu) for its intended purpose.
Alternative history where the first organophosphate nerve agent is discovered by Japanese scientists who name it tabun because if you are exposed ‘you’re dead, probably’.
Reblogged
Massachusetts put Harvard in its constitution in 1780 and haven’t taken it out since. It’s the only college, university, school of any kind named in its text.
The constitution entrenches the powers of Harvard and its officers. The legislature cannot amend or revoke Harvard’s corporate powers by any act short of a constitutional amendment.
Chapter V, THE UNIVERSITY AT CAMBRIDGE, AND ENCOURAGEMENT OF LITERATURE, ETC.
Section I.The University.
Article I. Whereas our wise and pious ancestors, so early as the year one thousand six hundred and thirty-six, laid the foundation of Harvard College, in which university many persons of great eminence have, by the blessing of God, been initiated in those arts and sciences, which qualified them for public employments, both in church and state: and whereas the encouragement of arts and sciences, and all good literature, tends to the honor of God, the advantage of the Christian religion, and the great benefit of this and the other United States of America -- it is declared, that the President and Fellows of Harvard College, in their corporate capacity, and their successors in that capacity, their officers and servants, shall have, hold, use, exercise and enjoy, all the powers, authorities, rights, liberties, privileges, immunities and franchises, which they now have or are entitled to have, hold, use, exercise and enjoy: and the same are hereby ratified and confirmed unto them, the said president and fellows of Harvard College, and to their successors, and to their officers and servants, respectively, forever.
(There’s something funny about putting the “President and Fellows of Harvard College” on par with “God” here.)
Massachusetts also entrenches Harvard donors’ right to see their gifts applied “according to the true intent and meaning of the donor or donors, grantor or grantors, devisor or devisors,” and confirms the rights and powers of the Harvard trustees.
Article II. And whereas there have been at sundry times, by divers persons, gifts, grants, devises of houses, lands, tenements, goods, chattels, legacies and conveyances, heretofore made, either to Harvard College in Cambridge, in New England, or to the president and fellows of Harvard College, or to the said college, by some other description, under several charters successively: it is declared, that all the said gifts, grants, devises, legacies and conveyances, are hereby forever confirmed unto the president and fellows of Harvard College, and to their successors in the capacity aforesaid, according to the true intent and meaning of the donor or donors, grantor or grantors, devisor or devisors.
State legislators and officials have a constitutional duty to cherish Harvard or its interests: “it shall be the duty of legislatures and magistrates, in all future periods of this commonwealth, to cherish the interests of literature and the sciences, and all seminaries of them; especially the university at Cambridge.”
The constitution originally disqualified any “president, professor, or instructor of Harvard College” from serving in the state legislature—the same disability still imposed on state judges, sheriffs, customs officers, and attorneys-general—but Amendment XXVI removed the disqualification in 1877.
The Declaration of Rights, which was ratified together with the constitution, and annexed to it, says that special privileges are granted only for “services rendered to the public”:
No man, nor corporation, or association of men, have any other title to obtain advantages, or particular and exclusive privileges, distinct from those of the community, than what arises from the consideration of services rendered to the public;
Harvard must be rendering exceptional service to the people of Massachusetts.
Amazing! If only the founders of Florida had had similar foresight to protect Disney World from the whims of the state legislature…
Reblogged
oh hey reminder that AT (“Absolute Terror”) fields are themed from the same source as “terror management theory”
reminder that that concept is about the defenses we erect to protect us from awareness of our own inevitable mortality
so the Unit-02/Mass Production Unit fight in End of Evangelion where Asuka goes balls out and channels all her perfectionist neurosis into beating them all before her power supply ends, but then they just rise up again and break through her AT field and impale her mother/avatar/self through the face to be cannibalized
the very moment where their spears, forcing their way through the field, turn into a Lance of Longinus - the very tool by which his inferiors killed God - and she exclaims in astonishment, that second when she realizes that no matter how perfect she is she’ll die anyway
that’s also a metaphor for realizing that no matter how perfect you are you’ll die anyway
Getting a chance in this new article to talk about something I think about too often: Disney World is, literally, by definition, a dictatorship
anoctobertale
Fun fact: They technically have the rights to build a nuclear reactor, and *were going to do it* but for whatever reason didn’t commit. https://www.youtube.com/watch?v=OlJlBIMQy7k
This is true, I added that in to this section as soon as I found out it about earlier! Disney maintains the legal authority to build a nuclear power plant in the RCID without having to ask for any permission from state or local governments
god it would be so cool if they did that and then the reactor melted down and irradiated the whole area, and people had to evacuate and then disney world was just this abandoned, radioactive theme park for the next 80 years
Since the OP was written, the Florida legislature revoked the right to build nuclear power plants, as retaliation for Disney being too woke.