Conventional economics invokes the idea of a race between our limited means and our unlimited wants. Let’s run faster and spend more! But what if we opt out of that race, finding ways to get more satisfaction without consuming more? On this site I explore these ideas, plus themes from popular culture and other random thoughts.
With Donald Trump incoming as president, what should you do with your portfolio? There are two answers:
- It’s too late; and
Here’s what I mean. Asset markets move very quickly on news. Any obvious Trump-proofing measures that can be taken have been taken — in fact, that happened before mid-morning on the day after the election. Buy more defense stocks because of additional military spending? Fine, but those stocks have already fully incorporated the election. Sell technology shares because of immigration policy changes? Too late.
So that brings us to the second answer: do nothing. If you have a well-balanced portfolio, you haven’t placed a bet on any particular sector — and so it doesn’t matter which sectors gain and lose under Trump.
The best investment strategy to deal with unexpected electoral news is (wait for it) buy and hold index funds.
In election years, people sometimes ask me who should get their vote, based on economic policy. I don’t make endorsements, but I do try to help people understand some things about economics and candidates:
- They can’t implement their policies. In almost every case, an elected official is unable to act alone, but instead must compromise and build coalitions. If you like a candidate’s stand on trade or the minimum wage, fine — but don’t assume that electing that person will get you the policy.
- Their policies wouldn’t have the intended effects. Political campaigns tend to overstate the effectiveness of policies. Raise tariffs on foreign goods? Fine, but don’t expect a bunch of jobs to come flooding back to the U.S. Take the minimum wage up to $15 per hour, no exceptions? OK, but if you’re a non-economist you’ll probably overestimate the effects.
- Political campaigns understate uncertainty. The fact is, we often don’t know what the effects of a policy will be. It’s hard to admit that in a political campaign but we economists know it’s true. The range of possible outcomes from any given policy is vast.
- If you rely on social media, you’re too sure about economic policy. Facebook, for example, is great for keeping up with friends but a really poor way to stay informed on economics. Why? Because you’ll see a lot of opinions you already agree with — and not so much from the other side. Thus it’s possible for you to link to a really strong article and get nothing but affirmation from your friends. You’ll think only a dope could believe differently.
Be especially aware of Facebook links to articles that say “there’s no evidence” on a particular side of an economic controversy. If it’s a controversy at all . . . trust me, there is evidence on both sides. I have a graduate degree in economics and I’ve been studying economic policy for 40 years now, and I am much less certain about the effects of a $15 minimum wage than the average Facebook poster, pro or con.
So who should get your vote? Look for a candidate who shares your values, and disregard promises about economic policy.
WONK ALERT: This is “down in the weeds,” but in case you want to know, here are the two big problems that make economic policies less effective and more uncertain than political campaigns lead you to believe:
I watched all 13 hours and 17 minutes of Star Wars I-VI before going to the theater with family for Star Wars VII, and here are a few thoughts (SAFE AT FIRST, THEN MILD SPOILERS SEPARATELY NOTED):
Star Wars I: The Phantom Menace. On seeing it again, the best part was the opening fanfare and crawl. “The franchise will live!” I thought . . . and everything was downhill from there.
Star Wars II: Attack of the Clones. Now after seeing it again, my favorite scene is the closing: Anakin and Padme’s wedding, with C3PO and R2D2 as witnesses. Why my favorite? Because the music foreshadows the tragedy and, more importantly, the bride and groom speak no words. Thus they save us from more dialogue like the earlier: “Now that I’m with you again, I’m in agony.”
Star Wars III: Revenge of the Sith. Now we’re getting somewhere. It’s not so good, but at least we find out why Darth Vader turned out to be the baddest guy in the galaxy. The best scenes are the ones that link him to Star Wars IV.
Star Wars IV: A New Hope. Woohoo! Somebody just opened the creative windows in a stuffy oppressive room (so to speak), and a fresh breeze is blowing in. What else from 1977 holds up so well as this movie?
Star Wars V: The Empire Strikes Back. Another great film, in which a running time of just over two hours gets us action, romance, Yoda and the big reveal: Darth Vader is Luke’s father! (I was one of the three people in a packed Birmingham, Alabama, theater who did not see that coming.) And the scene still shocks me on the Blu-Ray replay, even though I know every line.
Star Wars VI: Return of the Jedi. Nice film to wrap up the Darth Vader story line. The franchise is getting a little tired by now, but seeing the characters again makes it worthwhile. The scene where Luke tells Leia she’s his sister, the pyre on which Vader’s body burns, and the celebrations at the end wrap things up nicely.
I’m a fan through and through, so I can only quibble a little with the franchise on this point: The bad guys have a fatal over-reliance on A Big Destructive Space Station That Has a Key Weakness to be Exploited by a Few Inside Attackers and a Few Bold Fighter Pilots.
–SPOILERS FOR STAR WARS VII: THE FORCE AWAKENS BELOW—
And you know what? The bad guys change their name from the Empire to the First Order but they still didn’t learn their lesson about A Big Destructive Space Station That Has a Key Weakness to be Exploited by a Few Inside Attackers and a Few Bold Fighter Pilots. This time the space station is actually an entire planet but it’s just as vulnerable. The inability of the villains to learn and adapt puts them way below the level of the Borg (different universe, I know).
All that makes Star Wars VII for me a competent sequel and no more. (Better a competent sequel than three incompetent prequels, you think?) And because I’m a Star Wars fan, a competent sequel is good enough. I love it! – seeing the old characters aged about 38 Earth years, and meeting Finn and Rey.
And now the running time for the whole saga is 15+ hours, all of which I’ll probably see again before heading down to the theater for Star Wars VIII.
At our house, one of us is a huge fan of fantasy fiction while the the other favors science fiction (anything beyond Earth orbit!). We recently read a new book that we both liked — how? Fantasy deals with swords and castles, while science fiction is usually set in a spacefaring future. Here’s how: Laura Montgomery’s Sleeping Duty follows the story of Gideon Tan, a soldier who signed on as a sleeper to journey to a distant plant with his wife, also a sleeper. But when he was awakened, he found himself on the wrong planet — a planet that, in fact, had somehow chosen a monarchy over the free and advanced technological society that it might have become. Action ensues, wrapped up with a beautiful-but-not-sappy love story. Recommended!
Disclosure: If you follow this link and buy this title on Amazon, I receive a small (really small) commission. I do not know Laura Montgomery, but I like her writing and her world-building.
That’s how I think of the classroom I’m teaching in: “a pro-technology no-technology zone.” It is a place where we deliberately put aside social media and personal electronic devices (I don’t even bring my smartphone) and concentrate on learning economics. Then, when we go back on the grid, we’re empowered to think analytically rather than dashing from tweet to tweet.
If you don’t believe that staying continuously “on” with electronic devices reduces learning, just check the following references:
- Computer science professor (!) makes the case for banning laptops in his classroom
- Study shows students not allowed to use laptops do better
- Study shows advantages of taking notes by hand
. . . and check your intuition on a couple of points. When you’re in a learning environment, do you stay focused on the subject at hand if you have a laptop or smartphone continuously on and in view? And, if the person next to you is checking Facebook or Twitter, how does that affect your concentration?
If you haven’t read Cry the Beloved Country, you should. And after you do, read this post. The book was once part of the required first-year reading program at a university where I was employed. It is a moving novel about South Africa that taught the students more about diversity than ten diversity-training workshops ever could.
It’s great to see Brooklyn Tech High School students benefiting from the game that took over my life, back during the development phase. Together with co-authors Mark Schug and Scott Niederjohn, I developed the economic content for this game, and then served as project director for the print accompaniment, Learning, Earning and Investing for a New Generation. Now, from New York 1, here’s proof positive that students are using the game and learning from it. Go, Brooklyn Tech!
In my case that was ABC World News Tonight with David Muir (formerly Diane Sawyer). Here’s what my time with the BBC showed me:
- ABC has gotten lazy, or underfunded, or something. ABC now covers far too many stories by capturing tweets and using voiceover. The BBC still has actual reporters in a lot of places, especially overseas. Those actual reporters can tell you a lot more about what’s going on in places like Syria and Egypt than you can get from ABC’s scanning of Twitter.
- ABC News is for children. I don’t want to be too harsh, but ABC anchors often take on the tone of a preschool teacher telling her children they must be very, very sad about the people who were caught in the tornado. BBC World News America is more likely to simply report the story and let the tragedy explain itself. The BBC’s anchors (Katty Kay and Laura Trevelyan are the ones I have seen the most) are more like your British cousins than your preschool teacher.
- ABC News is in love with shallow “solutions” to public policy problems. Was there a school shooting? Pass a law. Is there an unemployment problem? Buy American. That’s the ABC approach. BBC World News America has more interviews, and while this can seem like “talking head” news, there’s more room for nuance. ABC News wants to divide the world into two parts: good people who favor their solutions (usually law or regulation) and bad people who do not. BBC holds open the possibility of a third group: people who are for solving the problem, but not in favor of the conventional solution.
- ABC News over-covers entertainment. Maybe it’s the Disney ownership of ABC, maybe it’s what the audience wants. But ABC News is obsessed with entertainment and entertainers. One thing I noticed with BBC World News America was that it just didn’t spend much time on entertainers, box office totals and the like. ABC over-covers entertainment, and it cross-promotes Disney, often without any notice or apology.
My own personal view is that all people of faith should help people make more of their lives: to prosper in faith, friendship and love. Sadly, the sector I work in — higher education — has done a bad job in its part of that, especially with students from poor backgrounds.
This piece from the New York Times outlines some of the issues. The real problem is fairly simple: it just costs too much to get a college degree. Higher education’s answer, as costs have escalated, has been to provide more need-based financial aid to the poor. That answer is inadequate because, as the Times piece points out, the college completion gap between rich and poor has been growing, even with all the financial aid.
Financial aid isn’t the answer. To a large degree it’s the problem. Try this thought experiment with me: Suppose the government said everybody had to eat a lot of apples. Suppose further that it said apples are so important that we’ll give you payment to help cover the cost when apple prices go up. Do you think apple producers would keep their prices low? Of course not!
Well, in higher education, we now have the government saying people really should go to college, and providing payments to help pay when colleges raise their prices. The colleges have not restrained their price increases, but instead have taken advantage of the fact that they can raise them even more when the government is helping people pay.
I would like to live in a country where bright but poor students get a good, fair shot at a college education. Unfortunately, we are farther from this ideal today than when I first entered the field. We have to do better.
I have never seen a time when kindness toward political opponents was more needed, or less rewarded. Those who deal civilly with their opponents are characterized by “their” side as sellouts. Those who demean their opponents are rewarded with attention and approval from their own base. The most worrisome thing of all is this: It works. Given the polarized nature of our country today, bullying political opponents seems to work better than debating them.
Fellow citizens, we have the cure in our hands. Make it stop working. Ignore negative political commercials, read a lot and get informed. And when one of your Facebook friends posts a highly appealing but deceptive attack on a political position — even if you’re on the same side with your friend — don’t hit that “like” button.
That’s what I’m doing, anyway.