Education, Inequality, and Race

American blacks are much better educated than they were a generation ago:

In 1968, just 54 percent of young black adults had a high school diploma. Today, 92 percent do. In 1968, about 9 percent of young African-American adults had completed college. Today, roughly 23 percent have.

However, their incomes have not gone up by as much as this might predict: 

The median income for a white head of household with a college degree is $106,600. The median income for a comparable black college graduate is only $82,300.

As David Brooks says,

It turns out that increasing educational opportunities does not by itself reduce income disparities. 

I think this is one of the most important discoveries of the past 30 years: that investing in education has little effect on inequality, and that while educated people still make more money than others, we have entered the realm of diminishing returns in terms of education's economic payoff. There are only so many good slots in the system, and creating more college graduates than there are good slots just leads to credentials creep and falling wages.

I think this is highly relevant to the current political climate. If the stagnating incomes of working class people are driving protests worldwide, as I think they are, then it could be that the failure of African American incomes to rise might be one of the reasons for the restlessness and anger we are seeing all around us. The system tells you that all you have to do is get education or training and get a job and work hard and you will be ok – which to us means security and a middle class lifestyle – and many people clearly feel that they have been lied to, that billionaires keep rising while they keep being kicked down. I do think police violence is a big problem in America, but I also think that rising incomes and a sense of a shared national fate are great tonics for reducing violence of all sorts.

In this sense I absolutely agree with angry people on the left that the system isn't working as it should.

But while I think are some things we could do to make life better for working people, black and white (remember that American police shoot more white people than black people, almost all of them from the working class), I do not think we have even a faint notion of what sort of system would solve these problems and get us back on the path to a middle class life for everyone rather than Gilded Age extremes.

If you listen to what people are saying in Seattle's "autonomous zone" about how they are going to live without capitalism, it's laughable.

I think some cities ought to abolish the police forces they have and start over, as Camden did, but I think it's just silly to believe that a modern society can survive without a police force.

The system we have is violent, heartless and unfair, but the ideas for radical change I have seen are pathetic. I just don't see any viable path but to keep struggling along within the system we have to make life better one small measure at a time.

The Self-Perception of Poor White Americans

The latest from the social science journals:

Poor White Americans report feeling “worse off” than poor Black Americans despite the persistent negative effects of racism on Black Americans. Additionally, some health issues are rising among White but not Black Americans. Across two representative samples, we test whether White = wealthy stereotypes lead White Americans to feel relatively worse off than their racial group and whether these perceptions have health consequences. Across both samples, White Americans perceived their own status to be significantly lower than the status of the majority of White Americans. In contrast, Black Americans perceived their own status to be significantly higher than the majority of Black Americans. Critically, status comparisons between the self and one’s racial group predicted the experience of fewer positive emotions among White, but not Black, Americans, which mediated reduced mental and physical health. We conclude that race/class stereotypes may shape how poverty subjectively feels.

I can't read the whole article, but I wonder about the role of shame in this. White Americans seem to feel more ashamed about losing a job or other setbacks then black or Hispanic Americans, so they are more likely for example to stop going to church after losing a job or getting divorced. This is usually interpreted as showing that white Americans believe more in the ideology of "standing on your own feet" etc., while minority Americans are more likely to believe that much of what happens is beyond your control. 

Time, Capitalism, and Philosophy

In America the great battle cry of the anti-capitalists is, "I want my time back." Whenever some young person says, "capitalism sucks," the underlying meaning seems to be a struggle over time: capitalism sucks because it requires people to work long hours to have any kind of decent life. A desire to control our time is at the root of the push for Universal Basic Income, summed up by a squatter I once met as, "Rent is just stealing. You shouldn't have to pay to live." If people had their basic needs met, most would probably choose to work for something better, but that would be their choice; nobody would have to work.

This desire to break the hold of work over our time goes back at least to Karl Marx, who thought the future workers' paradise would feature more leisure and much less work. In 1930 John Maynard Keynes wrote a famous article arguing that by 2020 we should only have to work about 15 hours a week to maintain a middle class standard of living. In 2013 I wrote here about a book by two contemporary economists called How Much is Enough?, arguing that if we could just get off the treadmill of wanting ever more we could focus more on the things that actually make for a good life.

Last year Swedish philosopher Martin Hägglund, who teaches at Yale and was vaguely connected to Bernie Sanders' presidential campaign, wrote a book called This Life: Secular Faith and Spiritual Freedom that makes the struggle over our time the central concern of philosophy. Hägglund shares the belief of all the young anarchists that capitalism is bad because it forces us to spend our time on things we hate, which spiritually destroys us.

Hägglund starts from the question of what it means to value something:

Whether I hold something to be of small, great, or inestimable value, I must be committed to caring for it in some form. . . . is a question of devoting my own lifetime to what I value. To value something, I have to be prepared to give it at least a fraction of my time.… Finite lifetime is the originary measure of value. The more I value something, the more of my lifetime I am willing to spend on it.

Hägglund extends this argument into both religion and politics. Hägglund is an atheist who accepts the old existentialist argument that belief in god strips our lives of meaning. If we are really going to live forever, then it doesn't matter what we spend our time on, and therefore it is impossible for us to really value anything. It is the finitude of our lives that gives our choices meaning. Therefore, positing anything eternal – god, heaven, life – demeans us rather than exalting us.

What I do with my time can matter to me only because I grasp my life as finite. If I believed that I had an infinite time to live, the urgency of doing anything would be unintelligible and no normative obligation could have any grip on me.

The part of Hägglund's work that has gotten the most attention is his advocacy of socialism over capitalism. To him, having to work at things we do not value is death to our souls, and the very opposite of freedom. Jedediah Purdy summarizes:

To take free choice seriously, he argues, we need a conception of freedom that is not tied to selling our time and talents at the market rate just to go on living. We are in “the realm of freedom,” writes Hägglund, when we can act in keeping with our values. By contrast, we are in the “realm of necessity” when we adopt an alien set of priorities just to get by. A great many of the choices most people face under capitalism fall within the realm of necessity. How do you make a living in an economy that rewards predatory lending over teaching and nursing? Or how do you present yourself in a workplace that rewards competition and often embarrassing self-promotion?

Economic thought treats these choices as if they were just as “free” as Bill Gates’s next decision to channel his philanthropic spending to this group or that. Hägglund sees it differently: Our economy keeps its participants locked in the realm of necessity for much of their lives, draining away their time in unfree activity. In the realm of necessity there is very little opportunity to spend our lives on the things we care for, to devote ourselves to what we think most worthwhile. Economic life may be a tapestry of choices, but as long as it directs its participants toward goals they do not believe truly worthwhile, a life of such choice is a grotesque of freedom.

The market presses some people closer to the bone than others, but it drives everyone, because it is a system for determining the price of things, among them time itself, and substituting that price for any competing valuation. You cannot exempt yourself.

There is certainly a sense in which this is true; if there are things you have to do, you are not really free.

But how, exactly, is that the fault of capitalism? Even the hunter-gatherers we like to imagine living in a lazy utopia had to work. Lions have to hunt; chimpanzees have to search for fruit and fish for termites. I simply do not understand these socialists who think that under a change of regime we could avoid doing things we don't want to do. Does anybody like cleaning bathrooms or repairing tar roofs? Hägglund recognizes that this is a problem, but he waves it away in the maddening style of all anarchists. Under democratic socialism, he insists, we will deliberate about all these things democratically and learn to value each other's needs and end up wanting to do things like rebuild sewers and change bedpans. Even Purdy, who is something of a left-wing utopian himself, finds this dubious:

There is always some work that not all that many people really want to do, unwelcome but socially necessary labor. There is no way around emptying bedpans, caring for the severely demented, sorting recycled goods, providing day care for other people’s children, picking lettuce, cleaning up after concerts, and so forth. Hägglund writes that under democratic socialism “we will be intrinsically motivated to participate in social labor when we can recognize that the social production is for the sake of the common good and our own freedom to lead a life,” making such labor “inherently free.”

Readers who have these doubts, Hägglund writes, “should consider their lack of faith in our spiritual freedom.”

Well, I have considered it, and I find that my lack of faith in our spiritual freedom is entirely justified. It could well be that under a different system we might enjoy our jobs a little more, or dislike them a little less, but I think a world where people freely do all the work that an advanced civilization requires is a straight-up fantasy.

There is an alternative to our way of living, but I think it necessarily involves being materially poorer than we are. If we did not apply pressure to people to work harder, and relied on everyone's spiritual freedom, we would do less materially productive work and end up with less stuff. I think this is so obvious that I cannot fathom how so many anarchists dispute it. We could have a world with more free time and less pressure to to economically productive work, but that world would have to be less posh than this one.

And to me, this world where we have more freedom but less stuff is within our grasp. We could have it if we wanted to; in fact, plenty of people do have it. All over the world millions of people work less than they could and live materially poorer lives because of that choice. I know people who have opted out of the system, live in poor communities where housing is cheap, do just enough work to get by, and devote themselves to what they really enjoy. This is entirely possible for most Americans and Europeans without any change in the system at all.

The fact that most people do not choose to do this, but choose instead to chase more money or more prestige by investing tons of effort in their careers says to me that Marx and Hägglund and all the rest of them are simply wrong about human nature.

Capitalism is not forcing anybody to do anything. It is the basic rules of mammalian life that force us to labor for our livings, and our own ambition that drives to work harder than we have to for nicer stuff and a higher slot on the totem pole.

So to all the young people out there who want their time back I say this: make it happen. Move somewhere cheap, learn a skill that allows you to earn a sustenance in 20 hours a week, and live your dream. Nobody is stopping you, certainly not "capitalism." As for assertions that we could have a world that is as materially splendid as this one without surrendering our time to the capitalist monster, a world in which we could all be both rich and free, I say, baloney.

Re-Opening and Urban Life

Writing in the Times, David Rubin and Paul Offit describe a Pandemic model they have developed and applied to data from 46 US states. The exercise, they say

revealed that crowding and population density, whether in densely populated areas in New York City or a meatpacking plant in South Dakota, are the most important factor in determining the havoc the virus can wreak.

After accounting for age distribution and health issues it was clear that risk not only of infection but of death broke between two groups: those in densely crowded areas, and everyone else. Large, densely populated areas like New York and Chicago had nearly twice the rate of transmission in the first two weeks of their outbreaks than the least densely populated areas we are tracking, like Birmingham, Ala., or the metro area of Portland, Ore. Yes, we did find that warming spring temperatures in some areas are helping to reduce transmission, but that effect is dwarfed by the impact of population density in our largest cities, particularly in the North.

Re-opening Philadelphia, they argue, would be disastrous, but in Harrisburg the virus would probably "fizzle out" if some basic safety measures are retained.

This means that areas in the country that are less densely populated or are already benefiting from warmer spring temperatures will probably be able to reopen more quickly, as long as the number of cases in their area have sharply reduced — we can’t give an exact rate — and if they maintain workplace safety, moderate distancing, and test to identify and trace outbreaks early.

Large, densely populated cities are going to need a more cautious plan. This is not just because more crowded areas increase the risk of spread, but also because we’re learning that crowding itself may also affect the death rate. The relationship between the amount of virus to which one is initially exposed and the severity of the illness is found in most infectious diseases. Models assessing outcomes from the 1918 Spanish flu epidemic reveal that the likelihood of death was dependent upon the number of infected individuals with whom that person came into contact. When a family is infected by chickenpox, the second child to contract the virus often becomes more seriously ill, presumably because they have been exposed to more of the virus.

"Re-opening" is going to be a slow and partial thing no matter what governments decide; anybody out there really want to attend a movie in a crowded theater right now? My office is in Washington, DC, and whatever my bosses say I'm not going back until I've been vaccinated.

Crisis Socialism

From the Trump Administration, a really great idea:

The Trump administration will use a federal stimulus package to pay hospitals that treat uninsured people with the new coronavirus as long as they agree not to bill the patients or issue unexpected charges.

….A 1918-like pandemic would cause U.S. hospitals to absorb a net loss of $3.9 billion, or an average $784,592 per hospital, according to a 2007 report in the Journal of Health Care Finance that called on policy makers to consider contingencies to ensure hospitals don’t become insolvent as a result of a severe pandemic.

Here we have, in a crisis, the germ of a national health care system: the government paying hospitals a fixed price for services and requiring them to jettison all the tricks they use to raise revenue. This is absolutely essential for any national health care scheme; lots of countries have private insurance, but almost all have prices fixed by the government. And usually those prices are not detailed at the level of so much for a test or an aspirin but a simple flat fee for treatment of a disease, or for days in a hospital. Another key thing in getting people to support such schemes is that they are easy for the patient, just like this will be.

All it took to get the US there was a pandemic that may kill a million people.

Tired Spanish Dogs

Emails from a reader to Tyler Cowen:

4 people in Alicante were ticketed for violating the State of Alarm for walking the same dog. Seems there were trying to get out of their apartments to walk their dog, only it wasn’t theirs. I’d like to know if the owner of the dog was pimping it out for walks.

Update: People are pimping out their dogs for walks Going rate seems to be between 20 and 25 Euros per walk.

RIP Jack Welch

The Supreme Being decided today that former General Electric CEO Jack Welch had fallen into the bottom 10% of humanity by performance and terminated his life. Commentators said this was only fitting, since it was how Welch always treated his own employees:

Known for his focus on efficiency and streamlining management, he would regularly cull the lowest-performing 10% of staff each year. "The underperformers generally had to go," he wrote in one of his books.

To me Jack Welch and his General Electric always epitomized everything that was wrong with American business in the 1980s and 1990s. He had a maniacal focus on the bottom line that made stockholders rich while discarding employees like empty soda cans. Here are two evaluations:

Under him, GE’s market value grew from $12 billion to $410 billion, making Welch one of the most iconic corporate leaders of his era. . . .

The U.S. industrial belt is dotted with communities devastated by the downsizing of GE, which began under Welch and has continued in the years after. At its peak, for instance, GE employed 30,000 at a sprawling integrated industrial plant in Schenectady, New York, that now employs fewer than 3,000.

One of Welch's bizarre pronouncements was that every GE division had to be among the top two in the world for its sector; otherwise it would be closed or sold. This led to the company shedding profitable divisions because they didn't conform to his rigid mandate, a perfect case of arbitrary corporate policy harming actual human lives.

Not that Jack Welch ever showed any concern for actual human lives.

The most spectacular thing Welch did was to make GE a finance company, expanding its GE Capital arm until it became nearly half the company. Financially that made sense at the time, because in the 1980s and 1990s finance was where the money was. GE's manufacturing arms were being battered by Japanese and then Korean competition, but on Wall Street it was raking in the cash.

Not that it lasted; GE Capital crashed badly in 2008, requiring a Federal bailout and dragging the company down with it. The value of the corporation fell from $410 billion to $75 billion, and it is now valued at about $105 billion.

Jack Welch's GE is a perfect case study of what went wrong with America in the neoliberal era, and of why so many people on both the right and the left are angry about our direction.

More on the Struggles of College Graduates

Data from the New York Fed confirms the difficulties college graduates have moving into careers:

The unemployment rate for young college graduates exceeds that of the general population, and about 41 percent of recent college graduates -- and 33.8 percent of all college graduates -- are underemployed in that they are working in jobs that don't require a college degree.

In December the unemployment rate for college grads 22 to 27 was 3.9%, compared to 3.6% for the country as a whole. Which is not really a big deal, and better than the 6.5% rate for 22-27-year-olds without a degree. People with the drive to finish college can almost all find some kind of work. But the transition to adulthood remains hard:

"It's maybe a little bit counterintuitive, but it’s not particularly surprising and the numbers have been pretty consistent for years," said David Soo, the chief of staff at Jobs for the Future. . . . "It's just that young people coming out of school often need a couple of years to get a foothold in the labor market, and then you start to see their unemployment and underemployment numbers come down. An investment in college is still the best one out there."

5G Doesn't Mean Anything

When I first heard about "5G" wireless I asked some friends what it meant. I got answers like, "You know, the next generation of technology, like 486 vs 386 or something." But what would that mean in terms of actual performance? Nobody seems to know.

The first country to deploy 5G technology widely was South Korea, and the results are now coming in:

…Samsung, which makes both handsets as well as 5G network equipment, told investors on its own call that it expects its 5G business in South Korea to “shrink somewhat compared to last year.”

That last revelation is sobering. South Korea was the first market to deploy 5G services on a wide basis. Service launched in April 2019, but by year’s end consumers already were complaining that it didn’t live up to the hype. Part of the problem is that services marketed under the 5G label can vary widely in terms of speed and availability. Some aren’t much faster than existing 4G networks. And the fastest—including those using millimeter wave technology—currently are available only in certain dense urban areas due to their signal limitations.

I understand that the actual performance of wireless systems varies a lot more than the speed of a CPU: the speed you get depends on how many other users are tied to the same tower, the geometry of the buildings around you, the weather, and probably a million other things. But the reluctance of tech companies to put any number on their services bothers me. Can't they figure out how much faster the new networks are on average? I suspect they can, and if they aren't saying it's because the number is underwhelming. Would you pay twice as much for a phone that was 20% faster than your old one?

It isn't just wireless. In my neighborhood you can get your internet from the cable company, or you can have Verizon run a fiber optic cable into your house. (They already run down all the streets.) When kids working for Verizon came around trying to sign me up, I asked them how the speed compared. They didn't know. I went online, and neither Verizon nor the cable company was saying.

I find this all puzzling. The only explanation I can come up with is that the technology just isn't that great, so telling people the actual performance numbers would depress sales rather than increase them. Which is a sobering thought.

The Online Advertising Bubble

How many times have you searched for some site or publication and been returned two links to the same thing: a paid link at the top and then the unpaid link just below it?

Economist Steve Tadelis noticed the same thing, and he started asking online ad experts about it. They told him, our data shows that search advertising works. He asked to see the data. They told him about their secret, proprietary algorithms. He kept asking to see the data. When he finally did, he thought it was bogus, just graphs showing that the more firms spent on advertising, the higher their sales.

At one point he served as a consultant to eBay, and he tried to persuade them to stop buying ads and see what would happen. They told him sales would fall dramatically and refused. Then, for unrelated reasons, eBay got into a dispute with Microsoft and decided to cancel all their adds on Microsoft's search engines. The advertising team braced for sales to fall by at least 5 percent. But that didn't happen:

The experiment continued for another eight weeks. What was the effect of pulling the ads? Almost none. For every dollar eBay spent on search advertising, they lost roughly 63 cents, according to Tadelis’s calculations.

To Tadelis this means most of the money spent on online advertising is wasted, and he fully expects the $273 billion online advertising business to collapse; he calls it the new tech bubble.

I suspect that "collapse" may be too strong a word, but it would not surprise me at all to see the ad revenues at Google and Facebook fall just like those for magazines have. After all the whole field is supposed to be data driven, and the data increasingly shows that people buying online ads are massively overpaying.

The Kids on the No. 6 Bus

In the 1970s, Nick Kristoff rode the bus to school with a bunch of working class neighbors in Yamhill, Oregon:

Chaos reigned daily on the No. 6 school bus, with working-class boys and girls flirting and gossiping and dreaming, brimming with mischief, bravado and optimism. Nick rode it every day in the 1970s with neighbors here in rural Oregon, neighbors like Farlan, Zealan, Rogena, Nathan and Keylan Knapp.

They were bright, rambunctious, upwardly mobile youngsters whose father had a good job installing pipes. The Knapps were thrilled to have just bought their own home, and everyone oohed and aahed when Farlan received a Ford Mustang for his 16th birthday.

Yet today about one-quarter of the children on that No. 6 bus are dead, mostly from drugs, suicide, alcohol or reckless accidents. Of the five Knapp kids who had once been so cheery, Farlan died of liver failure from drink and drugs, Zealan burned to death in a house fire while passed out drunk, Rogena died from hepatitis linked to drug use and Nathan blew himself up cooking meth. Keylan survived partly because he spent 13 years in a state penitentiary.

Among other kids on the bus, Mike died from suicide, Steve from the aftermath of a motorcycle accident, Cindy from depression and a heart attack, Jeff from a daredevil car crash, Billy from diabetes in prison, Kevin from obesity-related ailments, Tim from a construction accident, Sue from undetermined causes. And then there’s Chris, who is presumed dead after years of alcoholism and homelessness. At least one more is in prison, and another is homeless.

Nick Kristoff blames the disappearance of good working class jobs, and I agree that this is the immediate and maybe the most important cause. But I would extend that by saying that the cause was the disappearance of jobs in a culture where working and supporting yourself and your family was the supreme value -- "standing on your own two feet" -- leaving nothing on which people could rely when their jobs were gone.

Old Tractors and Too Much Technology

Instead of buying new tractors, many US farmers are scouring estate sales for older models without the GPS units and other high tech:

Tractors manufactured in the late 1970s and 1980s are some of the hottest items in farm auctions across the Midwest these days — and it’s not because they’re antiques.

Cost-conscious farmers are looking for bargains, and tractors from that era are well-built and totally functional, and aren’t as complicated or expensive to repair as more recent models that run on sophisticated software.

“It’s a trend that’s been building. It’s been interesting in the last couple years, which have been difficult for ag, to see the trend accelerate,” said Greg Peterson, the founder of Machinery Pete, a farm equipment data company in Rochester with a website and TV show.

“There’s an affinity factor if you grew up around these tractors, but it goes way beyond that,” Peterson said. “These things, they’re basically bulletproof. You can put 15,000 hours on it and if something breaks you can just replace it.” . . .

The other big draw of the older tractors is their lack of complex technology. Farmers prefer to fix what they can on the spot, or take it to their mechanic and not have to spend tens of thousands of dollars.

“The newer machines, any time something breaks, you’ve got to have a computer to fix it,” Stock said.

There are some good things about the software in newer machines, said Peterson. The dealer will get a warning if something is about to break and can contact the farmer ahead of time to nip the problem in the bud. But if something does break, the farmer is powerless, stuck in the field waiting for a service truck from the dealership to come out to their farm and charge up to $150 per hour for labor.

“That goes against the pride of ownership, plus your lifetime of skills you’ve built up being able to fix things,” Peterson said.

Whenever I read about one of these disconnects between what companies are selling and what buyers want, I wonder what is behind it. I suspect in this case that the market the manufacturers want is the high-end one, where they probably make ten times the profit per machine they do on basic models. Enough buyers want the cutting edge to make that a decent strategy. A basic machine, after all, would just be in competition with all the used ones out there, a supply that has probably been jacked up by ongoing consolidation.

I am no Luddite, but I have myself wished dozens of times for the old, simpler technology rather than the latest buggy version. Why can't I buy it?

We Are Helping the Poor

Interesting chart from Kevin Drum showing that if you take government help into account – Medicaid, Food Stamps, the EITC – the incomes of poor Americans have risen much more than those in the middle. From his post on his best charts of 2019.

What do Economists Know?

Economist Tyler Cowen posted a list of topics economists ought to be investigating, from "Why is life expectancy so long in Hong Kong?" to "What accounts for cultures of excellence?" One of the topics is:

What should [Indonesian president Joko] Widodo do? Indonesia is a large, populous middle-income country. It faces no major near-term security threats. It has a small manufacturing base and no major non-commodity export sectors. What is the best non-bureaucratic 10 page economic development briefing document and set of prescriptions that one could write for Indonesia’s president? For Indonesia, substitute Philippines, Chile, or Morocco.

Economists do not know the answer to this question; there is no formula for raising the income of a stable, middling nation. Nor do they know the answer to most of the other important questions facing policy makers: How could the US or Britain preserve manufacturing jobs without severely hurting the rest of the economy? How could Russia promote its middle class? How can west African nations develop modern economies? Etc.

This is what makes me think that economists don't actually understand the economy very well. Many of them promote laissez-faire policies, and that did work fairly well in Hong Kong and Chile, but the most spectacular examples of modern growth (Japan, Taiwan, South Korea, and now China) were in nations with very active government planners.

My question that economists should investigate would be, how did the East Asian nations do it? In particular, what did the central planners actually do, and why did it work? And what role did culture play?

Losing the Trade War with China

The Times reports on the tentative trade pact announced with China last week. The administration's main goal was to somehow foil China's strategy for the economic future, which involves using subsidies and easy credit from state-owned banks to fund strategic industries, thereby undercutting foreign competition and positioning China for leadership. This already worked in solar panels and it looked like it might work in 5G phone equipment, which I found worrisome. But while fighting that policy seems to me a good idea, Trump and Co. have not found a strategy for achieving their aims:

The Trump administration had a two-prong strategy for dealing with China’s industrial policy. Its first choice was for China to agree to tight limits on subsidies. The second was to leave steep tariffs in place across a wide range of goods as a kind of informal anti-subsidy measure, offsetting China’s support for its homegrown companies and giving American and other companies room to invest and compete in the United States.

The administration has now stepped back from the first position. And by cutting tariffs at all, the administration has shown a new willingness to retreat — although the products covered by the halving of tariffs on Friday were fairly low tech.

The issue of China’s state subsidies was more prominent in earlier talks. In April, Mr. Xi’s market-oriented team of trade negotiators accepted preliminary compromises in Washington that would have left a lot of tariffs in place and rolled back some Chinese laws that the White House said favored Chinese companies unfairly.

But Mr. Xi sided with hard-liners who demanded that the deal be torn up and renegotiated, because the deal did not include a broad reversal of tariffs that had already been imposed and because it demanded detailed changes in laws that were seen as violations of national sovereignty.

In October, trade negotiators reached another tentative deal without tariff rollbacks, only for hard-liners in Beijing to again demand revisions again and a removal of tariffs.

People close to China’s economic policymaking process say that as the trade talks progressed this past week, the mood among Chinese officials gradually shifted from deeply worried to cautious and finally, by late in the week, jubilant and even incredulous that the hard-liners’ goals had been achieved.

There's our tough negotiator-in-chief, leaving his opponents "jubilant and even incredulous" that they got so much.

Demography vs. Creativity

One of the new Nobel Prize winners in economics, Michael Kremer, once wrote a paper titled Population Growth and Technological Change: One Million B.C. to 1990. The point was to consider two ways of conceptualizing population growth: the Malthusian view that at any given level of technology, population will rise until people are desperately poor, which makes population growth a bad thing, and a technocratic view that says the higher the population, the more inventions will be made, and therefore the faster the economy will grow.

Kremer found that while the question is complicated, over the long term, population growth is proportional to population; more populous regions grow faster. (See the graph above; the curve has flattened in modern times because we started intentionally limiting our fertility.)  This contradicts Malthus, whose model demands that population growth slow as rising populations lead to more starvation and disease.

Kremer seems to feel that this is an optimistic finding, but I disagree. I see the past 10,000 years of human history as a race between population growth and better technology. This has been a brutal, vicious struggle in which the losers are cast aside and trampled under, and any slackening in the pace of economic growth means thousands starve. Even Kremer admits that there are periods when the positive correlations in his model break down, and we can all name several. In the 1650-1800 period Europe experienced a surge in agricultural productivity driven by potatoes, maize, and improved methods, which made this an optimistic time. But the rapid population growth that resulted meant that by 1800 populations were once again bumping up against the limits, so that cold weather in 1815-1850 led to the return of famine on a scale not seen for more than a century. Everybody knows what happened to the large Irish population when the potato blight struck.

Since 1850 we have mostly been able to race ahead of the Malthusian scissors, but the cost (forests cleared, swamps drained, species exterminated, ancient ways of life wiped out) has been very high. I think modern birth control might turn out to be the most important invention in human history, allowing us to finally step out of that race and create a sustainable world. We'll see.

Trade with China

Trade with China wiped out many American factory jobs; highly publicized estimates have ranged from 800,000 to 3.4 million. On the other hand Chinese goods are cheaper. According to this paper, since 2001 American consumers have saved $400,000 for every American job lost to Chinese competition.

Four Day Work Week?

The latest proposal from the left wing of Britain's Labour Party is a four-day work week. I am interested but dubious. I spent an hour last night reading about this and I learned that a few American companies have tried 4-day, 32-hour work weeks. Some studies show they make workers more productive, but not enough to make up for the lost 8 hours. But I have to say the state of the scholarship looks primitive to me. Thoughts?

More on Money and Happiness

Money has some effect on how happy you are, but not very much. The latest attempt to quantify the relationship comes from Justin Wolpers, who finds that to raise your happiness by one standard deviation you would have to raise your income by 1,640%.

And remember that this is not a flat curve, and most of the impact comes at the bottom; once you're in the upper middle class the impact of more money on happiness is hard to measure and you are not likely to notice.

Two things that are worth more than all the money in the world: a good marriage and a group of friends you see on a regular basis.

Billionaires are Changing

Thomas Edsall, from a piece about how the richest Americans are giving less money to Republicans:

This downward trajectory coincided with the steady transformation of the sources of wealth for those on the Forbes list. In 1982, when the list was first published, solidly Republican manufacturers and energy producers dominated — 89 of the 400 richest Americans having made their fortunes in oil.

By 2018, 59 of the Forbes 400 had made their fortunes in technology, including six of the top ten: Jeff Bezos, No. 1; Bill Gates No. 2; Mark Zuckerberg, No. 4; Larry Ellison, No. 5; Larry Page, number 6; and Sergey Brin number 9. Eighty-eight more made their money in the financial sector. In contrast to the 1982 Forbes list, only 14 on the 2018 list made their money in manufacturing and 24 in energy.

Incidentally Trump is on track to raise more money from small donations than any candidate in history.