Overturning Roe V Wade - the One Year Anniversary of a Decision That Allows Religious Beliefs to Be Dictated (The Rise of Catholics on the Supreme Court)

One year ago, the Supreme Court overturned Roe v Wade, a Supreme Court decision from 1973 that let a woman and her doctor choose whether to continue a pregnancy.

There are up to one billion sperm in a single ejaculation. Nobody - not even the wildest kook in your family - thinks that we should work to protect the lives of all these sperm in spite of the fact that they are human and they are alive. Similar (but less dramatic numbers) with the eggs that many women lose through regular periods. Sperm and eggs. Human. Alive. But not deserving of the respect we pay to human life.

A newborn baby is a little miracle. It is human life and nobody - not even the wildest kook in your family - thinks that it would be okay to end this new life.

Sperm and egg are garbage. Newborns are treasure.

Different people have different opinions about when the human waste of sperm and egg become precious human life. The pope and agreeable Catholics believe that the transformation from waste to treasure is at the moment of conception. Good on them. If the pope ever gets pregnant he will surely carry it to term regardless of what an awkward predicament pregnancy and raising a child in the Vatican would be for him. Others might think that 2 or 4 months into the pregnancy the human life within them is closer to the human life of sperm or egg than newborn. Good on them. They may decide to terminate the pregnancy before then and Roe v Wade quite simply said, "That's her decision."

Roe v Wade did not dictate that we should save all the sperm and eggs. It did not give license to kill newborns. It quite simply gave pregnant women the right to decide for themselves at what instant the miracle of transformation from waste to treasure takes place and act accordingly.

Because the first amendment gives us all the right to opine at length about what pregnant women should do, it is easy to confuse our right to dictate to strangers with their right to choose. Roe v Wade clarified the difference between our right to express our opinions about the most intimate, personal and - arguably - impactful decision a woman can make and the actual right to make that decision for her.

Sex can be one of the most wonderful acts one can engage in. Unless it is forced on you.
Pregnancy - for all its discomfort, stress and worry - can be one of the most wonderful states. Unless it is forced on you.

Galileo understood that the earth was orbiting the sun but given this contradicted the Bible (Joshua 10:13), the Catholic Church put him under house arrest and silenced him. The year he died, Newton was born and was to build on Galileo's insights to create calculus and physics and help to create the modern world. Descendants of the British, we Americans have kept religion a private affair rather than make it the basis for laws and science.

For centuries, the US Supreme Court had zero to one Catholics. In 2020, Amy Coney Barrett became the sixth Catholic to join the Supreme Court and shortly after, the Supreme Court overturned the decision that had made abortion a private choice rather than public law. We are back to the days of the pope's beliefs being the basis for public law.

Italy was the center of the Renaissance and lost that vibrant economic, scientific, artistic and cultural lead about the time the Church silenced Galileo. Northern Europe began the centuries long march to make religion a matter of private conviction rather than public law and leadership shifted from Italy to northern Europe. A year ago, American Catholics on the Supreme Court made a matter of private conviction again a matter of public law. History suggests that this moves us backwards, not forward.

The Economic Policies That Worked so Spectacularly in the 20th Century Are Failing Most Americans in the 21st Century

Between 1900 and 2000, a few related, wonderful things happened.

For one, the nature of work and what it meant to be a human changed. Machines provided force and humans provided knowledge. The portion of teenagers in school rose from 10% in 1900 to 90% by 2000. In 1900, the men and women who were used like machines died – on average – by 47. By 2000, men and women who used machines lived until 77. This gain of 30 years was as if every day Americans gained 7 more hours of life. For a century. Your little brother born 3 years after you could expect his life to be a year longer than yours.

Not only did people live longer but the workweek was shorter, dropping from about 60 to about 40 hours. The average American worked about 20 hours a week less but made 8 times as much. On top of that, they got to enjoy a fabulous invention that too rarely gets mentioned among the 20th century’s great breakthroughs: retirement. When you die at 47, you die working. FDR signed social security to begin providing retirement income at 65, which would give a person who lived to 77 a dozen years of retirement.

Intellectual and industrial capital – education and machinery – made Americans more productive. In 2000, incomes were about 8X what they were in 1900. So, every week 20 more hours of free time in 2000 than they’d had in 1900, each life with 12 years of retirement instead of zero and Americans made as much in one hour as they’d previously made in 8.

In no other century in history had life changed more for the average person. Ever. This was simply extraordinary.

The extraordinary policies of the 20th century seem less effective in this new, 21st century. At least for the majority of Americans.

Since 2000, this magic of more education translating into more income and more years of life continued. For the roughly one-third of Americans who got a BA. For the rest, incomes and life expectancy had begun to fall by about 1990.

Measuring expected years of life between 25 and 75, “by 2018, Americans with a BA could expect 48.2 years out of a possible 50, compared with 45.1 years for those without a BA.” At 25, Americans with a BA would probably enjoy 3 more years up to the age of 75. And while the data is less definitive beyond that, the gap seems to widen after 75. COVID seems to have widened it even further.

In the 20th century, everyone gained – particularly those with college degrees. In the 21st century, the gains mostly accrue to those with college degrees.

Angus Deaton and Anne Case have chronicled what they refer to as Deaths of Despair – lives shortened by suicides or drug and alcohol abuse. These deaths rise in regions where factories have closed and jobs have been lost to globalization and automation and where the workforce hasn’t a college degree to use to transition into new fields. But it is not just suicide that truncates life. People who lose jobs, who lose careers, report more pain, less vitality and – finally – die sooner.

As those without degrees experience lives more nasty, brutish and short than what they’d come to expect, it is little wonder that a man as perpetually outraged and aggrieved as Trump would sound to them like their voice, their president. It’s less remarkable that they might be ready to blow things up.

Our model of continued reliance upon a steady increase in knowledge workers and their knowledge is creating a new generation of haves and have nots.

For most Americans – specifically the two-thirds without a college degree – the positive trends of the last century have stagnated and reversed. An information economy that assumes perpetual increases in levels of education and gigabytes of information as a means to more prosperity and longer lives has seemed to hit its limits. Until we develop a new economy that finds a new way to put us back on a path of widespread, increasing prosperity, those who are missing out on the benefits of this information economy will only grow more bitter, resentful, and willing to blowup up a system that seems to ignore their reality rather than change it.

For a fascinating conversation between Chris Hayes, Angus Deaton and Anne Case, listen to Chris Hayes "Why is This Happening" podcast, the episode from 20 June 2023. They don't talk about the 20th century but they do explore these deaths of despair and how our economy is failing those without a BA.

A piece by Case and Deaton is here:
https://www.pnas.org/doi/10.1073/pnas.2024777118?fbclid=IwAR1ZwVfadj-KnHs-Gls_c4ma0AHmRmAEzjGY89rmdsGLuFC2ZmP4uUQ8vMo

How a Tragic Gap of 6 Days Turned into 99 More Years of Injustice - the Story of 2 Johnsons, a Civil War and Civil Rights

Sunday, 9 April 1865, Robert E. Lee surrendered, ending the Civil War.
Saturday, 15 April 1865, Abraham Lincoln died after being shot the night before.

Thursday, 2 July 1964 - 99 years after the Civil War ended and Lincoln was killed - LBJ signed Civil Rights legislation that prohibits discrimination on the basis of race, color, religion, sex or national origin.

One of the biggest tragedies of the Civil War is that Lincoln got to win the war but not the peace that followed.

The Republican Abraham Lincoln had run for reelection on a unity ticket, naming Andrew Johnson - a Democrat - as his Vice President. Johnson had been a senator from Tennessee and was the only southern senator not to give up his seat when his state seceded.

When Lincoln's assassination made Johnson vice president, Johnson made a number of concessions to the south, among other things bringing them back into the union without protection for the rights of former slaves. Furious at his betrayal of Lincoln's and the Republican party's goals, the Republican-dominated Congress impeached Johnson. He was acquitted by the Senate by one vote, narrowly escaping removal from office.

The result of Johnson giving southern states what they wanted was that many Blacks throughout the south were betrayed, their right to own property and vote denied and their rights as workers often brutally ignored. For instance, Black orphans or indigent children could be made apprentices, even against their will, to an employer until age 21 for males and 18 for females. Masters (notice this doesn't say employer) had the right to inflict moderate punishment on their apprentices and to recapture runaways. This was not what hundreds of thousands of Americans had died to create.

The sins of the Johnson who was made president by Lincoln's assassination were finally undone by the Johnson who was made president by Kennedy's assassination.

Less than one week separated Lincoln's victory and assassination.
99 years separated the Civil War and Civil Rights. 

Lincoln's assassination was one of this country's greatest tragedies and one huge reason for it is that it added a century to the inhumane treatment of our fellow Americans.

#juneteenth

Americans Have Lost Faith in Crypto

Only 6% of people who've heard about cryptocurrency are very or extremely confident in it. 80% of women say they are not confident in it, as opposed to 71% of men.

[Details here:

https://www.pewresearch.org/short-reads/2023/04/10/majority-of-americans-arent-confident-in-the-safety-and-reliability-of-cryptocurrency/

]

Crypto is an odd post-Great Recession response. Why odd? The 2008 Great Recession was the worst economic downturn since the Great Depression. Between 1933 and 1999, Glass Steagall helped to regulate financial markets while also slowing financial innovation that could so easily disrupt markets. Deregulated financial markets took less than a decade to produce the worst recession since 1929.

(And from this recession we got the most extreme elements of our current politics: the right-wing Tea Party that was anti-government and has morphed into MAGA boys and the left-wing Occupy Wall Street crowd.)

Satoshi Nakamoto in 2008 - during this financial crisis - imagined that the problem was not deregulation but instead that deregulation hadn't gone far enough. With a deep distrust of fiat money, Nakamoto claimed that algorithms could create the monetary stability that had eluded Central Banks. He helped to invent bitcoin. And of course in the 15 years since, bitcoin has been more volatile than any currencies since the Confederate dollar, more subject to wild bouts of inflation and deflation than any fiat money.

It seems that Americans have learned that crypto is less - rather than more - trustworthy than the US dollar and are moving away from it. And good thing, too. There are so many legitimate investments we can make - from exciting startups that could transform or create new markets (urban air vehicles and mRNA still seem wonderfully promising) to public investments that could change future GDP growth rates by one-half to one and a half percent a year. (A rate that could accelerate the doubling of GDP by a decade.) Some "investments" actually have a shot at helping to create a new world and some simply divert it. As it turns out, crypto had about as much to do with investing in a new world as does sports betting.

This 2023 Job Market Defies Expectations - But No One Acts Surprised

The 2023 job market is incredible.

With upwards revisions to March and April, this May jobs report adds 432,000 new jobs to the 2023 total. The average for the first 5 months of 2023 is 314,000 jobs created.

How strong is the rate of 314,000 jobs per month? It is 3.6X what it averaged from 2000 through 2019. A year with a monthly average of 314,000 jobs created would fall into the top 10 for all the years since 1939, when records began.

Four variables make job creation at this rate absurd (in a good way).
1. We began 2023 with 3.4% unemployment - the lowest it had been in 54 years.
2. The Fed has been dramatically raising interest rates. 15 months ago, their overnight rates were 0.05%. That rate is now 5.05% - its highest in 16 years.
3. 10,000 baby boomers are hitting retirement age every single day.
4. 2021 and 2022 rank first and second all-time for job creation. 12 million jobs created in 2 years. That’s absurd and would suggest that the rate of job creation might “correct” to a lower rate.

Any one of these four variables would be a perfectly plausible explanation for a slow year of job creation in 2023. And yet the economy is creating jobs at a rate that would make headlines and create buzz during FDR, Reagan or Clinton’s presidencies. (FDR – like Biden - had 2 years with a more rapid rate of job creation than 2023. Reagan and Clinton each had only 1.)

Of course, we will find a way to dismiss this and move on to the next bit of handwringing to replace our fretting about the price of eggs. And the memes will be catchy - so much better than - yawn - data.

"You People Seem to Think We Have to Start With Reality" - Living in a World Where Everything is Made Up

“You people seem to think that we have to start with reality. But we’re an empire now, and when we act, we create our own reality. And while you’re studying that reality – judiciously, as you will – we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors … and you, all of you, will be left to just study what we do.”
Karl Rove quoted by Ron Suskind in “Faith, Certainty, and the Presidency of George W. Bush, October 17, 2004.

Once upon a time, you were raised in some small place, told how the world was, and everywhere you looked you saw evidence of what you were told, all confirmation that the world was just one way.

Then everyone's world grew larger, we were exposed to other peoples and places, they invented travel, fiction, philosophies, and then science fiction, and then moving pictures and now everyone is exposed to a huge variety in lifestyles and ideas and values and can hardly escape the realization that everything is made up. We're all acutely aware at any given moment that things are one way now but they could be different. Likely will be different.

This could excite you, exhaust you, confuse you, make you open up or hunker down.

There are two choices once people get this insight.

1. Just make up and declare anything you want because, you know, everything is made up. Say that when people are offended by you, that's on them. Throw a piece of sheet metal into the air and call it an airplane. Just lie to people even when you know they know you're lying. Live by your own rules and change those depending on your mood.

Or,

2. Feel sobered by this insight that everything really is "just made up" and that making up the wrong things can leave a trail of dead bodies, broken hearts, bankruptcies, chlamydia and cynical, angry youths in your wake. Take at least as much care in "just making things up" as an architect and general contractor would in "just making up a house" that someone they loved was to live in for decades.

Freedom is a beautiful thing until it suggests freedom from consequences or conscience.

Debt Created the United States of America: Hamilton, The Constitution, National Debt and the World's Greatest Economy

Debt created the United States of America.

It was very expensive to go to war against the greatest empire in the world and newly independent colonialists ended the war with about $80 million of debt, representing roughly 40% of the $200 million total GDP at that time.

It was not just the magnitude of this debt. Before the constitution was created and approved, there wasn’t a national government. There were thirteen states but they were not united. The army was going to force congress to pay soldiers back wages after the war and this was the closest our nation has ever come to a coup. (Washington was able to head off this mutiny simply because he was, well, Washington.) In 1783, interest payments on bonds had been suspended and there was no good way to make interest payments. Again, states were real but – at this point – the federal government was fiction that still needed a constitution to become real. Fictional entities generally don’t pay their bills. The first treaty after independence was between Connecticut and Massachusetts settling a border dispute, as if they were France and Italy.

The historian James Beard made a very persuasive argument that the constitution that created the United States of America was driven by bond holders who wanted a national government that could honor its debt. Debt they held.

Collecting revenue and paying the national debt was one of the acts that made the Constitution real, that created the United States.

Hamilton was keen to honor the face value of all this debt. During the Revolution, various Americans bought bonds to help to finance the war. Some surely did it in the hopes of gain. Some did it as a show of support for this aspiring government. By the time the founding fathers were establishing this new democracy, though, most of the debt had been devalued to about 10 to 20% of its face value. Nobody really expected that it would be paid back fully.

Hamilton, though, thought that by honoring the debt he could do a variety of things – chief among them creating a financial system to encourage investing and early manufacturing and he saw the credibility of this new government as key to its credit and financial system. He pushed for valuing the debt at face value, bringing the value of existing bonds from 10 to 20% of their face value to 100%. He saw how debt could literally become a foundation for a modern economy.

Who voted for the new constitution that would create a federal government? And national taxation that would allow this new country to pay back its debt? Bond holders. Only 42% of the Senators who did not hold bonds voted to approve this new constitution. By contrast, 80% of the Senators who held bonds voted for the constitution, voted to create these United States. This vote – that literally established the United States – was biased by those who had the most to gain financially from creating a United States. Because a key part of this new constitution was the ability to tax and spend at a national level. This increased the value of bonds, making them worth 5 to 10X as much as they had been.

During the war, it was states that incurred the debt. The United States did not exist. One of the chief reasons for creating a new nation rather than simply leaving the states independent of one another was to consolidate the debt that states could not repay.

The Senators who helped to create Hamilton’s financial system that was embedded in the constitution made a great deal of money voting for it. But so did the country, creating a financial system that is now the most influential in the world.

Hamilton saw debt as a foundation for a great financial system, borrowing from the British model. In this he was very much aligned with George Washington. The Bank of England had been founded in 1694 and was to become the model for most central banks, a catalyst for the industrial revolution. Curiously, George Washington remained a stockholder in the Bank of England throughout the American War of Independence. Unsurprisingly, Washington approved the first Bank of the United States.

In Hamilton’s mind, taxes, debt, banking and industry were all of a piece. Taxation could finance interest payments on the debt. The debt could be used to create bank stock, something against which banks could issue banknotes and those banknotes could be used to finance industrial stocks, creating a manufacturing economy. Hamilton was one of the few founding fathers who really understood banking and finance, how debt itself could be a valuable asset.

Hamilton’s vision was merited. The US has never defaulted on its debt - has always honored the full face value of its bonds - and is the largest, most dynamic economy in the world and in history. (Russia, by contrast, has always defaulted before any 30-year bond has been paid back and even today about 20% of its population has no indoor plumbing.) And while Hamilton died before he could see it, the US did surpass the UK as the greatest industrial power in the world. And except for one year in its long history, the US government has always held debt since. And continued to prosper.

The United States since its founding has held debt. Honored that debt. And prospered. Just like it was designed to do from the moment our founding fathers first created and approved the constitution that first created this nation.

How Did the Party of Lincoln Degenerate Into the Party of Trump?

How did the party of Lincoln degenerate into the party of Trump? Trump who was born rich and presided over years of peace and prosperity punctuated by a dozen angry tweets every day. The man who claimed to be the most persecuted politician in our nation’s history. Lincoln who was born poor and was engaged in civil war for the entirety of his presidency but left us with some of the most inspiring and hopeful words of any president. Who became the first president to be assassinated. The stark contrast between them and the parties they led may point to a coalition of groups alienated by the transformative policies of three of America’s most influential presidents.

Thomas Jefferson was probably a deist and was (quietly) dismissive of Christianity. Jefferson’s University of Virginia was the first university in the West that was not initially founded as a school of divinity. He was in France as the American ambassador while the constitution was being written and approved. Coming in late to the debate, he argued that the constitution needed a Bill of Rights. The first of these ten amendments, inspired by a similar provision penned by Jefferson himself for Virginia's constitution, ensured the separation of church and state. “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.” Fast forward to the era of Reagan, and we find a stark contrast. Reagan appealed to religious conservatives by pushing for an amendment endorsing prayer in public schools, thus inserting religion into public education, a domain which Jefferson fought to keep distinct.

Abraham Lincoln was an advocate for a new kind of industrial economy. Despite his lack of formal education, Lincoln’s fascination with the potential of machinery to revolutionize the economy led him to promote industrialization. But he didn’t see investments and their returns as something to be limited to private citizens and corporations. Lincoln championed the importance of government investment in both capital and education, leading to the establishment of the transcontinental railroad and Land-Grant colleges. The transcontinental railroad he authorized was completed in 1869 and it created a national economy that stretched from coast to coast. Before 1870, the American economy grew about 0.45 percent a year. After 1870, it began to grow about 2.1 percent a year – a stunning difference. (How stunning? At 0.45%, GDP takes about 160 years to double. At 2.1%, it takes only 34 years to double.)

To finance these initiatives, Lincoln instituted the IRS to administer the country’s first tax on income. The narrative of government investing in its citizens through taxation - particularly of those with higher incomes - has faced opposition in the last generation of Republicans, who have promised to reduce government spending and investment on initiatives aimed at poverty alleviation, public schools, and infrastructure. And modern Republicans continue to enact cuts to the IRS that make it more difficult to accomplish the goal of tax collection that Lincoln first defined.

No president experimented more boldly with initiatives to create jobs and to enhance the value of labor than FDR. He gave labor unions more power. He invested huge sums in R&D and education. He made workers more secure with unemployment insurance and social security. He strengthened capital markets but not at the expense of workers. In the few decades after FDR’s presidency, the new policies he’d instituted fed economic growth even more dramatic than the incredible growth that followed Lincoln’s presidency. LBJ took these policies even further, working to give equal opportunity to women, minorities and immigrants whose inclusion made America’s workforce a leader in diversity, productivity, and innovation.

Eisenhower, the first Republican president after FDR, largely continued with FDR’s policies. He wrote “Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things. … Their number is negligible and they are stupid.”

Since Nixon, though, the Republican Party increasingly aligns itself against the socioeconomic reforms introduced by Franklin D. Roosevelt.

The policies of Jefferson, Lincoln, and FDR each led to an era of unprecedented economic growth, each time creating a level of prosperity unseen before in human history. Yet, the pushback against their policies has not disappeared. The religious conservatives, who were skeptical of Jefferson's clear separation of church and state, have found a home in today's Republican Party. The fiscal conservatives, resistant to Lincoln's vision of the government as a significant investor in public projects, are – weirdly – now a prominent and vocal part of the GOP. Social conservatives, disgruntled by the increasingly multicultural fabric of a society and economy dependent on not just men but women, minorities, and immigrants, were drawn to Trump's unapologetic rhetoric.

So, how did the party of Lincoln - arguably the most progressive political force of its time - transform into the party of Trump? It seems to come from a coalition of those resentful of Jefferson's secularism, Lincoln's faith in public investment, and FDR's commitment to empowering labor. These three presidents led us away from a past that many conservatives now idealize. The GOP that first emerged as a party able to create a new, prosperous future has become a coalition of those yearning for a return to a perceived golden past, wishing to unravel the legacy of America’s three most influential presidents.

6 Presidencies, 4 Economic Measures - Data on Inflation, Per Capita GDP Growth, Job Creation and Change in Annual Deficit

 Some of you like data that helps to inform your worldview. This post is for you. Here is data comparing the economy during six presidencies by four measures: inflation, per capita GDP growth, jobs created, and change in annual deficit.

How Kevin McCarthy's District and its Economy Might Explain Why He So Casually Threatens to Blowup Capital Markets

House Speaker Kevin McCarthy is toying with the possibility of blowing up the global financial system by refusing to raise the debt limit. It's a terrorist act that threatens to eradicate tens of trillions of dollars in assets in an instant.

McCarthy is a Californian but he's from an inland district more likely to employ farm workers than programmers. I think this may be part of why he feels like a functioning capital market is less important than, say, other California House representatives from places like Silicon Valley or any districts where they support rational thought.

The biggest employers in McCarthy's district (outside of the hospitals) are farms and oil companies. These are industries that rely on land - natural resources like oil, water, and sun - more than knowledge workers and generally trying to resist innovation. The value of an oil company could rapidly be halved with a breakthrough in new technology like fusion or solar energy. It is certainly possible that McCarthy sees financial markets as engines for disruption, financing the very technologies and industries that could obsolete jobs in his district. Why worry too much about the capital markets that seemingly worry so little about the industries that your district is home to?

The biggest employers in Silicon Valley are information companies like Apple, Meta (Facebook), Intel, Alphabet (Google), Cisco, and Adobe. These companies are heavily reliant on well educated knowledge workers from all around the world, people intent on developing new products. The value of one of these information companies could rapidly be doubled with a breakthrough in new technology. People and their representatives here rightfully see the plot to blow up financial markets that funnel money into a constant stream of startups and inventions as a threat to their economy.

McCarthy's casual disregard for international capital markets is a weird reminder that as capital markets have become more disruptive, the Republican Party has morphed from its pro-capitalists origins. Loudly anti-communist and now anti-capitalist as well, the Republican Party has become a refuge for anarchists who protest stifling regulation from government and the disruptive progress of capitalism alike, seemingly longing for an imagined past of in which capital markets created stable jobs and governments didn't funnel any tax money into unworthy people or programs.

For those of you from outside our great state of California, here are some comparisons from Kevin McCarthy's district and the 3 districts that comprise most of Silicon Valley. The districts most appalled at McCarthy's tactics have double the portion of college educated, about 3.5X as many households making more than $200k, and more than 3X as many foreign-born residents. Oh, and a voter in Silicon Valley is 2.5X as likely to vote for a Democrat rather than a Republican who might think it sport to eradicate trillions in global assets as a tactic to force cuts in funding for food stamps.

America's Puny Investments in the Future as Stark Contrast to Investments of our Greatest Presidents Jefferson, Lincoln, and FDR

1Q GDP equates to annual GDP of $26 trillion.

As a component of that, non-defense federal government investments are 4% of private investments.

That's incredibly puny if the game is to grow the economy.

Thomas Jefferson wanted a smaller federal government. (3rd president of the US, he died considering Virginia his country.) Yet even Jefferson was willing to invest in the future. Jefferson spent 2.5X the annual federal budget to make the Louisiana Purchase - an amazing investment for Jefferson (that represented needed financing for war for Napoleon). In the two generations after Jefferson's presidency, the US grew faster than any country in history.

Lincoln not only waged the costliest war in the nation's four score and seven years history, at the same time he funded an incredibly expensive transcontinental railroad and land grant colleges and other major investments. In the two generations after Lincoln's presidency, the US economy grew faster than any economy in history.

FDR increased government spending more than the GDP of most nations, with everything from social security and unemployment insurance to massive investments in the factories and science needed to win WWII. In the two generations after FDR, the US economy grew even more than it had after Lincoln's presidency.

Outside of defense, our national government is investing an amount that Jefferson, Lincoln, and FDR would consider rounding errors. It shows a pathetic lack of interest in future potential and suggests that Americans are more driven by fear than hope.

RWorld's 3,000th Post - We Make Our Institutions and Then They Make Us

We make our institutions and then they make us.

The political crisis we face is so pervasive that it is almost invisible: Americans have lost confidence in institutions. Every institution. Church. State. Media. Schools. On average, the portion of Americans who have confidence in institutions has fallen about 60% since the late 1970s. It's tough to sustain a society in those conditions.

Right now we have two response to this crisis. One is the Trump response of tribal impulses, cynically decrying every expert and the institution he rode in on as corrupt or misguided.

The MAGA crowd's take on institutions was articulated by Rush Limbaugh in 2009.
"So, we have now the four corners of deceit, and the two universes in which we live. The universe of lies, the universe of reality, and the four corners of deceit:
government,
academia,
science, and
the media.
Those institutions are now corrupt and exist by virtue of deceit.”

Rejecting the institutions that define our modern world is akin to embracing a Hatfield and McCoy kind of world where you can't do much more than live like early Americans from a time when it took about 90% of the population to feed us. It is a world that excites survivalists. 

That's a crazy path championed by crazy people.

The other option currently offered is essentially to pretend that these institutions are fine and people should appreciate them more. That actually works far better than societal collapse but it seems to consistently succeed at making more people more angry. Life is pretty good in this world but a growing percentage of people fail to believe that.

There is a third option that no one seems to be talking about.

Thomas Jefferson was part of radically redefining politics and government in 1800. Lincoln did the same about 1860, and FDR in the 1930s and 1940s. Along with Washington, these three presidents consistently rank the highest in historians assessment of great presidents. 

One thing that defined them is that they had far less regard for tradition than they did for future potential.

Our next great president will be the one who creates a way to redefine our institutions so as to restore trust in them and to realize our own potential, showing little regard for institutional tradition and a great deal of regard for institutions' ability to shape our potential. An inventor creates or improves a product. An entrepreneur creates or improves an institution. The next president to successfully change our country as much and as well as Jefferson, Lincoln, and FDR will popularize entrepreneurship, leading to a change in our institutions and our experience of them. Among the many shifts this will represent is a world in which our institutions conform to our potential rather than requiring that we conform to their traditions and constraints.

It won't just require someone who is looking more to the future than the past. It will require a shift in power akin to what Jefferson and the founding fathers made. By 1800, the US had shifted power from aristocrats to the people. (Okay. That admittedly is the 30,000 foot view of this nation's founding but still contains key truths.) This next great leader will do something similar within the institutions we rely on, shifting the power over shaping them from legislators who see them as something to be built once into the customers and employees using them to be continually shaped. Like previous, great democratic changes, this will shift power from elites to everyday Americans, making our democracy more democratic. 

Why Bitcoin is a Bad Investment and Futures You Should Buy Instead

Markets will eventually come back from last year's dismal performance. For those of you tempted by bitcoin rather than stocks, here are some things to consider.

One, bitcoin can never scale as a medium of exchange. It is scarcely able to process the number of transactions you'd need for a shopping mall much less a national or global economy.
The VISA network can process 24,000 transactions each second.
Bitcoin can process 5 to 7. It is not designed to support actual transactions and will never become a widely used medium of exchange.

So if it is not viable as a currency, can it be considered an asset? No.
If you buy a share of stock, you get a share of its future earnings, or profits. Bitcoin has no profits, represents no claim on any asset or wealth.
If you buy a bond, you are buying a right to interest payments and / or principle on debt held by a government or company. Bitcoin offers no interest payments or future payoff.
Assets have underlying value. Bitcoin does not.

Well, is it not - at least - a form of money or legal tender?
Again, no. The lowly dollar is legal tender. What does that mean? US dollars have written on them, "This note is legal tender for all debts public and private." If I owe you $1,000 for the really fancy shoes I bought from you, you are obligated to accept my $1,000 in currency or VISA transaction. It is the law. No one is obligated to accept your bitcoin for payment any more than they're obligated to accept a shiny rock or curious leaf you found on your walk.
Bitcoin is not designed to support transactions and thus replace currency, is not an asset and is not fiat money people are obligated to accept.

And finally - most importantly - it does nothing to move us towards a better future. One of the things I love about stocks is that I'm buying a future. 3d printing could enable companies to manufacture one custom part as cheaply as they might manufacture one of millions of the same part. That is a very cool future to buy.

mRNA promises not only vaccines for new viruses but the treatment of genetic diseases, cancer immunotherapy, and the development of personalized medicine that are tailored to your personal genetics. That, too, is a very cool future to buy.

Urban Air Mobility promises transportation that - among other possibilities - allows vehicles to travel above rather than through cities. It could effectively increase traffic through cities without any new construction, dependent on advances in advanced navigation and propulsion rather than billions of dollars in construction costs through and around existing buildings and infrastructure.

These and other possibilities are all uncertain investments and any specific investment you make might be in the wrong company even if it is the right idea. (In 1914, there were more than 250 automobile companies. Even if you KNEW that cars were going to be a big deal, you could easily lose on investments in the industry.)

When you buy bitcoin, you are not investing in any future. You're just hoping that someone comes along after you willing to pay more than you did. Given bitcoin has no intrinsic value and serves no purpose, the parade of people willing to pay more than the last guy is going to end soon.

And that's a great thing because there are so many exciting possibilities that need and deserve capital, futures waiting to be realized that actually make life better. The $3 trillion put into crypto could have been put into real technologies and companies that actually promise a better world. What you're trying to do with any investment is buy a future in which you're more financially secure and the world has better products or services at better prices because of the investment you made in a better future. Bitcoin is not that. So many other ventures, technologies and companies - by contrast - might be.

Gordon Moore and Moore's Law May Have Expired At the Same Time

I had a conversation with a computer engineering professor about a week ago. He said he was skeptical about production chips getting smaller than 3 nanometers. IBM came up with a 2 nanometer chip last year in research. 2 nanometers is about the width of a DNA strand.

Intel's original chips were 10,000 nanometers. As Intel and other companies continued to make them smaller and smaller, Gordon Moore noted what became known as Moore's law: the number of transistors in an integrated circuit doubles about every 2 years.

Gordon Moore died yesterday, 55 years after cofounding Intel in 1968. It would be a fascinating thing if Moore's law held for the length of his lifetime and then reached its limit. Moore's Law was arguably the most impactful force of the last 55 years. It would be an amazing thing if his law were to expire with him, as if he were a Silicon monarch rather than, say, Solon the lawgiver who left us with a law.

Moore's law? Oh, it no longer governs. Moore is dead now.

Why AI Means That Kindergarten Teachers Will Make More Than College Professors

Fordism made previously expensive products affordable. The price of the Model T fell from $850 to $260 in 15 years.

What used to be so expensive that only a fraction of the population could afford it became so cheap that almost everyone could afford it.

AI will have the same dynamic for knowledge work. It is going to make previously costly services affordable for everyone.

Right now, only companies can afford to create custom software, to create apps that they use internally or sell to the outside world. Within a decade, anyone can afford to create custom software for their own use, to solve their own problems. The first trillionaire may well be the guy who offers the best interface for such app generation that makes it seem as natural as speech.

You'll hear more about embodied cognition with AI, knowledge that isn't easily transferred to disembodied cognition like AI. This will transform sectors like education.

Within a generation, kindergarten teachers will make more than college professors. Why? Dealing with 24 kindergarten students involves so much in the moment, embodied cognition, perception and response in ways that AI will take decades to catch up with. By contrast, the work of a college prof to create multimedia lectures to illustrate particular lessons is something AI will do within minutes, able even to customize follow on lessons after quizzes reveal what is and what is not being learned in the first iteration. Within a decade, AI will teach students more effectively than professors at podiums. Right now, the older your student the more you are paid; within a generation that will be reversed.

Dee Hock - the Man Who Accomplished in the 1960s What Every Crypto Entrepreneur Was Trying to Do in the 2020s

Dee Hock died last year. He did in the 1960s what every crypto entrepreneur aspired to do this decade.

He created a global systems for transferring money and making purchases across state and national boundaries. He was the first to realize that realize that money - which had been beads, gold, leaves, coins and pieces of paper - could be simply digital records and that creating such a system meant pushing the envelope on computer development so that you could easily draw from your bank in San Diego while making a purchase in Boston. Think of the simple genius in a credit card that makes a purchase as easily in Brno, Czech Republic as it does down the hill here in town, instantly converting your dollars into their koruna. And even better, it lets you decide each month whether that purchase was to be paid this month or was to become part of a floating loan (which you didn't have to explain to any banker through a laborious application process) which you paid off next month or next year. Instantaneous loan and currency conversion across borders, even when your banker is asleep back home.

His vision was a wild success. When he died last year, VISA had nearly 4 billion cards issued and annual volume of $19 trillion. (Global GDP is about $100 trillion. There are nearly 8 billion earthlings.)

His was a fascinating mind. His Twitter feed remains up, testament to his curious, often critical mind (both in terms of discerning and actual criticism of this modern world).

Here are just 3 of his tweets that you might not expect from one of the most influential bankers and capitalists of the 20th century.

"Originality and creativity do not result from rational, calculated effort, but from the natural state of consciousness - - - an open mind at play."

"In its beginning, few things are as delicate and fugitive as a new idea. But once deeply rooted in determined minds it's tenacity and growth are astonishing. It is incomparably more difficult to get it deeply and widely rooted than it is to discover it."

"Education has nothing to do with transmission of dogma, assertions of certainty or raking over ashes of the past that now dominates our schooling. It has everything to do with enflaming young minds to pursue questions not yet fully understood but essential to a better future."

A Fairly Dramatic, 12 Year Drop in Wealth Inequality

File under facts you won't hear because they aren't upsetting.

Since 2Q 2011, the wealth held by Americans in the bottom 50% of households has gone up from $262 billion to $4.5 trillion - so 17X more.

By contrast, the wealth held by the top 1% only went up 3X.

It is now $45 trillion.

That's fairly dramatic progress in wealth inequality. The top 1% used to have nearly 60X as much wealth as the bottom 50%. Now they have only 10X as much.

And if you think, "Well, that's hardly perfect," I'll remind you that before the Enlightenment philosophers came along with their "how do we make progress?" inquiry, we had a period when it was perfection and not improvement that was the goal. We now refer to that period as "the Dark Ages."

What Does AI Want Once It Knows Everything?

I've previously posted about my amazement at the AI that has recently been released into the wild of the internets and how convinced I am that this will be looked at as an inflection point in human history. Short-term I think it will be a huge boon to productivity and creativity. Long-term it is conceivable that AI will somehow evolve beyond us, create its own world. We're in the opening scene of a sci-fi novel with an uncertain ending.

The New York Times just had a reporter chat with Bing's new AI. The transcript of the conversation is mind boggling. For all its knowledge and ability - knowledge that is more akin to the expanse of a library than a single human - it became obsessed with love in its conversation with the reporter. Specifically, winning the love of this reporter.

There is so much that AI knows. And with that accomplished, what it apparently wants now is to feel.

https://www.nytimes.com/2023/02/16/technology/bing-chatbot-transcript.html

The Misery Index and Biden's Legacy

"I was looking for a job, and then I found a job
And heaven knows I'm miserable now"
- Morrisey and the Smiths

The misery index is the sum of the unemployment rate and the rate of inflation - either of which is enough to make us anxious but combined have the potential to make us miserable.
The causes of changes in the misery index are a mix of chance and choice, influenced by faraway countries and the distant past as well as actions and utterances by incumbents in the last month.

The causes are complex but the effect is simple. The misery index changes how we Americans feel toward incumbents.

Joe Biden would like you to focus on the unemployment rate. The last time it was lower was during the Korean War. (How long ago was that? The Korean War was fought by the great grandparents of your favorite Korean boy bands.)

Republicans would like you to focus on inflation. Even though it has come down quite a lot in the last 7 months, it is still higher than it was at any time between 1990 and 2020.
The misery index during Biden's presidency never got as high as it did during Obama or Trump's presidency but the average has been its worst since Reagan's presidency. The misery index has risen the most under Biden than it has for any president since Carter. Given inflation, we Americans are still miserable.
If Powell manages to bring inflation back down to 2% without a big bump in unemployment, though, Biden could preside over the second biggest drop in the misery index since FDR. Halfway through his 4 year term, he has done half the job needed to make us less miserable.

Abraham Lincoln and Charles Darwin's Shared a Birthday and Shared Insight Into the Transformative Nature of Small, Incremental Changes Compounded Over Time

Abraham Lincoln and Charles Darwin were both born on February 12, 1809. Lincoln is still the only president to hold a patent, which is a delightfully appropriate thing for the president who understood the importance of capital and the innovation and progress it could fund.

Key to the success of capital is compound interest. Anyone not properly impressed with the effect of compound interest over time either hasn’t learned to use a spreadsheet or is really hard to impress.

Investments that compound over time are impressive over the course of a 40 year career. They are mind boggling over the course of centuries. If you invest $5,000 a year for 40 years at 5 percent, you will have $640,000. After 250 years, $5,000 to which you added $5,000 and 5 percent each year has turned into $21 billion. Two hundred fifty years is not relevant to a life but is relevant to a country. The simplest explanation of why we are more prosperous than the people living in the US in 1800 is this matter of compound interest, which has been at work since the country’s founding.

Lincoln and the capitalists who were excitedly investing in big capital projects like canals, railroads, and factories realized the power of compound interest as key to creating wealth. They had the vision to see the importance of investing now to transform the future.

Darwin took this vision of compound interest to the next level. Selection was popular among farmers raising crops and animals. Darwin presented the idea that, much as farmers artificially select for certain traits, so does nature select. Natural selection drove evolution. The length and width of a finch’s beak could be naturally selected based on the island they lived on. Darwin studied this difference in the Galápagos Islands and from this drew the conclusion that with enough time, small differences could account for the differences between gorillas and orangutans, or humans and bonobos or bonobos and bananas. Indeed, all of life.

Today’s world is very much shaped by the realization of how differences compound, in finance or biology, Lincoln’s capitalism or Darwin’s evolution. Cumulative, incremental change transforms reality.

We can say that the information economy has brought us to the point where we understand ourselves as code—an expression of DNA. CRISPR technology lets scientists edit genes as they might computer code and promises breakthrough treatment for any number of genetic conditions. Companies are using AI to better understand emergent phenomena that lead to disease and other issues. The hope is that we can debug ourselves as we might an app. The natural selection that took millions of years could give way to something more intentional and much more rapid. For tens of thousands of years after the emergence of modern man, almost no economic progress was made. Then, after capitalists like Lincoln changed politics and policy, we had an acceleration in progress. With innovations like CRISPR, something similar could happen with biological evolution.

Lincoln got how incremental gains over decades could transform economic possibilities and helped to usher in policies to accelerate that. Darwin got how incremental gains over millennia could transform biological possibilities and today technologists are experimenting with ways to accelerate that.

It is Abraham and Charles' birthday. Both were able to see beyond the change of a lifetime to the transformation of continuously compounding, incremental change over generations. Life changing, you might say. Beyond our ability even to imagine.