31 July 2016

The 2 Kind of Statements Trump Makes

Trump makes two kinds of statements, both with great confidence. The one kind can immediately be proven false (this from ABC):

The other statements can't yet be proven false.

It's also worth noting that Trump's inability to stay quiet during the Democratic National Convention - his compulsion to have the spotlight shifted to him - is what we will look back on as his fatal flaw. Tired of being ignored, he has made a series of outrageous statements this week, statements that likely mean his steady drop in the polls to his huge loss in November.

What Race and Astrology Tell Us About Our True Inner Selves

From Datacalysm by Christian Rudder:
On OkCupid, one of the easiest ways to compare a black person and a white person (or any two people of any race) is to look at their "match percentage." That's the site's term for compatibility. It asks users a bunch of questions, they give answers, and an algorithm predicts how well any two of them would get along over, say, a beer or dinner. Unlike other features on OkCupid, there is no visual component to match percentage. The number between two people only reflects what you might call their inner selves - everything about what they believe, need, and want, even what they think is funny, but nothing about what they look like. Judging by just this compatibility measure, the four largest racial groups on OkCupid - Asian, black, Latino, and white - all get along about the same. In fact, race has less effect on match percentage than religion, politics, or education. Among the details that users believe are important, the closest comparison to race is Zodiac sign, which has no effect at all. To a computer not acculturated to the categories, "Asian" and "black" and "white" could just as easily be "Aries" and "Virgo" and "Capricorn."
So, how do race and astrology define us? About as much as we or other people believe they do. Which could be a lot .... or not at all.

28 July 2016

Legitimizing Desire: Why We Needed a Religious Revolution to get Our 1st Market Economy

During the first market economy of roughly 1300 to 1700, desire had to be made legitimate. This was one important reason that church reform was central to the emergence of the first economy, shifting the regulation of desire from the church to the individual.

Martin Luther helped to ignite the Protestant Revolution by translating the Bible into the German language that could be understood by the average German and not just the elite who'd been educated in Latin. But literacy rates were not that high and art still had a huge role in transmitting ideas.

Martin Luther challenged the Church in so many ways that it's easy to forget that one of his most startling challenges was around the issue of celibacy. He was in favor of emptying out the convents and marrying off the nuns. On the left is a painting of Martin Luther with his wife, the former nun Katharina von Bora. It was made by Lucas Cranach the Elder, probably the most famous German painter of his time and Martin Luther's friend. It was circulated to illustrate this notion that individual freedom included even the right of priests and nuns to marry. Martin Luther realized how important this message was for religious change and his friend Lucas helped him with this mission.

Lucas Cranach the Elder also did this painting of the Silver Age on the right. Like other Renaissance artists, he went back to the classical myths and art of the Greeks and Romans to find inspiration in depicting a less cloistered world. The Italian Donatello, who died in 1466, six years before Lucas the Elder was born, had carved the first nude since classical times. By the time of Martin Luther, art had become more openly erotic, the human body a legitimate theme for artists throughout Europe.

It might be easy to dismiss this new theme in art as tangential to the bigger changes sweeping throughout Europe but it seems as though it was, instead, fundamental.

At the dawn of the first economy, in about 1300, the church controlled about 70 percent of the money in circulation. Desire of every kind - whether in the form of covetousness, curiosity, or lust - was controlled by - or least condemned by - the church. Individual desire was something to be repressed rather than allowed. One of the overlooked reasons for the darkness of the Dark Ages, the incredible poverty and brevity of life, was because desire was illegitimate.

Desire is the engine of any market economy. In a traditional or even centrally-controlled economy, you can tell the consumer what they want or what is good for them. Their desires are incidental to what society produces and distributes. One definition of a market economy is that it caters to the individual. People want a quarter pounder with cheese even though experts agree it's not healthy? The market makes quarter pounders by the billions. The market lets the individual define what goods and services are offered. In a world in which the church controls 70% of the currency, the individual has almost no control.

Martin Luther did more than undermine the Church's exclusive control over proper thinking by translating the Bible into German and giving each literate German the chance to reach his or her own conclusions about God's word. When he married Katharina von Bora, he helped to legitimate desire.

As it turns out, the first market economy had to make desire of every kind legitimate. Covetousness, the desire for goods that make us happy but aren't essential to survival, had to be legitimate in order for economic progress to kick in. And covetousness, lust, and curiosity - the desire to have, to possess, and to know - are so closely linked that it's simply not possible to allow one without allowing them all. The story of our first market economy was a story about deciding that individual desire is legitimate and best left to the individual to regulate or channel.

More of Lucas Cranach the Elder's amazing paintings here.

25 July 2016

Well Isn't That Special?

Some Sanders supporters don't see the difference between Trump and Clinton. Remember the Nader supporters who didn't see the difference between Gore and Bush back in 2000? That worked out well.

I used to think that at least people who made poor choices would learn from them but now realize that the feedback comes so long after their action that they don't. The same progressives outraged at Iraq and the de-regulation that helped to make the 2008 recession a Great Recession aren't clever enough to see a link between those outcomes and their votes in 2000. So they're at it again because one thing they do have in common with Trump supporters is a hatred for the current system and a willingness to crash it if it won't change to accommodate their personal views.

Still, if the Republican Party is dumb enough to nominate Trump ,and Sanders supporters are deluded enough not to see a difference between Clinton and Trump, the country likely deserves what would follow from a Trump reign. Still, it's a shame for the rest of the world that has yet to recover from our last major failures.

What Will Donald Say This Week?

This week there's a big scandal because hackers - most likely Russia the FBI says - have revealed private emails from within the Democratic Party. Imagine if tweets were private and Donald Trump's had just been revealed for the first time.

It's seem more and more clear that Donald Trump is not motivated by money, adulation, or power. Or, rather, he's motivated by those things but they pale in comparison to his true motives, his lust for attention. It seems to me that most of his behavior can simply be explained by an addiction to attention as powerful as any cocaine or alcohol addiction.

Traditionally, during the convention, the rival party or candidate goes into relatively quiet mode while the other party has their time in the spotlight. Given Donald couldn't even take time out of his speech introducing his vice president to actually talk about his vice president, it's hard to imagine that he'll be able to contain himself this week. He's done nothing conventional yet.

This is the man who has claimed his opponent's father helped to assassinate JFK, bragged about the size of his penis during a presidential debate, recently made it cleat to Putin that if he were to invade a Baltic state, members of NATO, that he wouldn't protect them, wants to institute a religious test for entrance to the country and suggested that the US could default on its debts, an act every rational economist sees as a guarantee of a financial crisis. (Slate has a stunning list of the outrageous things he's said here.) If he's as eager to shift the focus from Hillary Clinton to himself as I suspect he is, this could be the most fascinating week yet in Trump watch.

And whatever he says it could cause his ratings to rise some more. Warning Americans not to vote for Trump because he's racist enough that white supremacists love him is like warning teenage boys not to go to that beach because its a favorite for topless women.

21 July 2016

What If America is Not as Frightened as Trump Thinks?

If Americans are frightened by Trump's oratory, Trump will win. What are they afraid of in his eyes? Crime, illegal immigration, and the economy.

So what does Google Trends - which monitors the pulse of American's interest through its search, say about these topics?

Do American's searches suggest that they're more interested in a good or bad economy?

As you can see above, "bad economy" peaked during the Great Recession. Since about 2012, sentiment has decidedly turned towards "good economy." It's even stronger than it was pre-recession.

What about illegal immigration? Trump has said that before he came along this issue was largely ignored. 

As you can see, the peak mention of illegal immigration was about April of 2006. Since then it has largely faded in terms of the number of searches. Not really an issue new to Trump and certainly not bigger in the minds of Americans since his campaign began.

Finally, what about crime? Even cops are being shot. Surely people are upset about this?

Crime searches are higher than they were just a year ago. Curiously, they are still lower than they were in February 20011 and considerably lower than November 2005.

It is not just public perceptions as measured through this window of searches that suggests these hot buttons Trump is pushing are not that hot. Illegal immigration, unemployment, and even the number of police officers shot is down from what it was in previous administrations. Reality and perception alike indicate that these aren't big issues for Americans.

Donald is certainly pushing buttons. It's not obvious that they're wired into the country's collective anxieties. 

Finally, two favorite snapshots of Republican National Convention.

Ted Cruz tells convention attendees to "Vote your conscience," and gets booed off the stage.

Trump and Pence stand on stage at the convention's close with their families to sound of Rolling Stones playing, "You Can't Always Get What You Want."

Zipf! An Elegant Formula that Predicts How Often You'll Use Words

On occasion, we stumble across something so elegant that it makes us stop. We suddenly see order in what we once thought of as random activity, hear the voice in the din.

Zipf's law states that within any large body of text, a word's popularity or rank multiplied by the number of times it shows up will result in the same value.

Rank X Number  = constant.

This law holds for the Bible, pop songs, and literature. Here's the law applied to James Joyce's Ulysses:

 That is an absurdly robust prediction. I don't care who you are, that's abundantly cool.

Dataclysm by Christian Rudder is the source for this gem of an idea.

18 July 2016

End of Day One of Republican's 2016 Convention

Reza Aslan, in his book on Islam, is just one of many writers to claim that in cultures that have an oral tradition, with people who don't read, words have a particular kind of magic. Mohammed was challenged to produce miracles like Jesus but said that he was just a messenger. The word had power. And in some cultures an abra cadabra spell is thought to be enough to change reality.

I couldn't help but think of this as I listened to Rudy Giuliani speak. You have to admire the fact that Giuliani has managed to sustain a sense of impending apocalypse for 15 years now. That shows a real commitment. But he got most worked up when he talked about President Obama's reluctance to use the term, "Radical Islam." There seems to be belief that if only someone in power would dare to utter these words, ISIS's power would be shattered. It's like a priest's incantation.

It's worth remembering that the folks who came into the Republican Party through the Tea Party came in through talk radio. Mike Pence was a talk show host. These are a people of an oral tradition and they still seem to believe in the power of the spoken word as something magical.

GOP convention attendees are certainly angry. It will be really fascinating to see whether this message of fear and anger resonates with the American people. This audience loved to be scared but in a down home sort of way. I wasn't sure whether the next speaker was going to be Wes Craven or Larry the Cable Guy.

Finally, it was sad to realize that the American way of life is no longer an option. Listening to each side talk about the other it seems obvious that our only choices are fascism or socialism. That's too bad because what we had seemed pretty good.

The Rise and Fall of the Republican Party

Just last week, many of the country’s tech leaders signed a letter arguing “Trump would be a disaster for innovation.Signatories include Vint Cerf, who helped to invent the Internet, Steve Wozniak, the man who helped to invent the personal computer, and local Qualcomm founder Irwin Jacobs, who helped to invent the smart phone. These people understand innovation and the Republican Party’s presidential candidate alarms them.

This week the party faithful gather in Cleveland to present their nominee. The party's first president was Lincoln and since then the parade of candidates has included Teddy Roosevelt, Eisenhower, Reagan, Bush, and now Trump. It's easy to think the party's struggles are because of increasingly weaker candidates; it might be that it's instead because of increasingly weaker policies. 

Once upon a time, the Republican Party was the voice for tech leaders and their policies fed progress.

The Rise
Republicans emerged as the anti-slavery party in the late 1800s. They were the progressive party on two counts: they were more humane and they were the capitalists who believed in investment and innovation as a better route to prosperity than enslavement. Northern Republicans created a new economy.

The industrial economy made regional economies national. Railroads let big factories sell across state lines. In this new reality, the notion of states’ rights that complicated things like enforcing contracts across state borders became as quaint as sewing by hand.

When the South seceded from the Union, the Northern – largely Republican – representatives passed a flurry of legislation that created the modern corporation and expanded interstate commerce, laying the foundation for unprecedented prosperity.

Between 1861 and 1933, Republicans had the White House 72% of the time. In 1865 the economy was not much different than what it was in 1776; by 1933, the nation had automobiles, electricity, telephones, and radio. Capital was king and Republicans were presidents.

The Fall
Since then, the economy has evolved more rapidly than the GOP. The region that now leads the world is Silicon Valley and it represents a new, entrepreneurial economy that is different in many ways from the industrial economy. Detroit made cars. Silicon Valley makes companies. Wages there (specifically, Santa Clara County) are about two-thirds higher than the rest of the country, and the region has created trillions in wealth.

Every politician approves of Silicon Valley but it doesn’t approve of every politician. Republicans have struggled there.

In California’s 17th in 2014– a Congressional district that includes Santa Clara and headquarters for Apple, Intel, Yahoo, and eBay – no Republican candidate won enough primary votes to compete in the Congressional general election. The same happened in District 14, which includes Stanford, and headquarters for Alphabet (Google) and Facebook.

Immigration and social traditions are two reasons Republicans struggle in the Valley.

Depending on how it is measured, immigrants are members of 25% to 50% of tech industry’s founding teams. These companies aren’t part of a national market: they are part of a global market that includes customers, employees, investors, and partners. They connect countries rather than wall them off and they aren’t going to support isolationist policies.

Social tradition is another issue. San Francisco’s government became the first to officially recognize gay marriage. The folks in startup friendly regions like Cambridge, Massachusetts, Austin, Texas, and Boulder, Colorado realize that the boundaries between technology innovation and social change are fluid. When they talk about disruption, they might be talking about Uber or gay marriage.

The entrepreneurial economy will challenge any political party that is nationalist and socially conservative. (And of course Donald Trump’s aversion to free trade is yet another reason for the Valley to recoil from the GOP.) To adapt, the Republican Party would have to abandon so much of what now defines it.

Many Republicans will rightfully argue that they, too, embrace entrepreneurship, global markets and the disruption that comes with this. As this year’s primaries revealed, though, such Republicans are now a minority within the Party.

It’s possible that advocates of the new entrepreneurial economy won’t affect the outcome of this election and as a nation we will opt for candidates and policies that make our economy more closed and less innovative; the policies that make a country more prosperous are not always the most popular.

Still, one hopes that forces within the Republican Party are studying Silicon Valley because until the GOP adapts to the new realities it represents, the GOP will represent the past of this great country and not its future.


14 July 2016

Why All-Time Market Highs Are Largely Meaningless

The S&P 500 is at an all-time high. Optimists point to this as proof that things are great, have never been better. Pessimists point to it as further proof that market prices are irrationally inflated, a bubble ready to burst. An all-time high doesn't signal either outcome.

If you put $10,000 into an account that paid a 0.5% annual rate, compounded daily, your account would hit a "new high!" every day. Every day.

Compound interest rates mean continuously higher value. The reason the market does not hit a new, all-time high every day is simply because the market is really volatile. It can hit a high one day that it takes years to again reach. But over the long-run, it is like that savings account in that it - with fits and spurts and leads and lags that can distort the effect of steady returns - will hit a new high with some regularity.

Is the market a bubble ready to burst?
One argument against that is here in this data on the S&P 500:
From 1950 to 2000, the annual return was 9.4%
Since 2000, the annual return has been 0.8%.
This alone could suggest that the market could rise quite a lot without reaching excessive levels over the long-run.

Is the market under-priced and ready for a huge rally?
One argument against that is here in this data on Price to Earnings (PE) Ratio.
From 1950 to 2000, PE ratio for the S&P 500 averaged 15.3
Since 2000, it has averaged 25.5
This alone would suggest that the market is not under-priced.

So what will the market do?

I think the stock market will be driven by bond prices. Within the last week, the interest rates on Dutch bonds went negative for the first time in 499 years. About a day later, German bonds went negative. Investors are actually paying governments to take money. That suggests two things. One, people are really risk adverse, actually embracing a small loss rather than risking a big one. Two, anyone interested in returns will be forced into investments other than bonds and the most obvious of those is stocks. As people finally remember that uncertainty is not a new thing but is instead what characterizes markets, they'll accept more risk and will likely take on that risk by buying stocks. Given that returns on bonds are so low, people will accept lower returns on stocks, which means that the PE will go up. As the global economy continues to grow, that means that earnings will also go up. So, the combination of rising PE and rising earnings should mean a really strong stock market through the rest of this decade.

13 July 2016

I like to read comics, do a little sewing, and then cry - How Liberals and Conservatives Differ In Sex, Love & Hobbies

OKCupid releases fascinating data about how Americans present themselves. As it turns out, we neatly fit into stereotypes. Conservatives like hobbies like going to shooting ranges and fixing things and liberals like museums, yoga, and crying. (Does it make me a moderate or very liberal if I'd likely cry if a date tried to make me do yoga or go to a shooting range?)

Political leanings matter because a record 50% of Americans say that they could not date someone with conflicting political beliefs. A record 25.5% say that political ideology is more important than physical attraction. 

Above (click on it to make it larger) is the word cloud about popular activities for conservatives and liberals, further divided by whether they are or are not open with feelings. I find it amusing that repressed liberals are as likely to sew as screw for hobbies. All those bottled up feelings might find an outlet in making clothes or in tearing them off. And maybe the sewing is just done in the aftermath, wardrobe repair. 

On a possibly related note, Harper's Index reports,

  • Average age at which an inmate in federal prison first fired a gun: 13.2
  • First had sex: 13.7

Much more OKCupid data in the form of word clouds by topics is here

12 July 2016

The Fundamental Conflict Between Markets and Democracies

Economic progress is at odds with the democratic process in a way that's rarely mentioned.

One sign of economic progress is choice and diversity. I'll get lunch in about an hour and I have so many choices that it would take all week to properly assess them. There are problems with abundant choice but almost no one would choose to go back in time to when the ways to eat did not include the options of Pho, burritos Tikka Masala, Massaman curry, pizza, and ramen. The market economy is incredible in its ability to orchestra the efforts of dozens of growers, farmers, shippers, cook book writers, cooks, waiters, and entrepreneurs to provide you with a $10 lunch. It's nearly miraculous and one of the things it's allowed for is incredible diversity. You can buy a jazz album or a rock album. If rock, you can choose soft or hard. If soft rock, you can choose music from the 50s or 90s. If from the 90s you can choose from which continent. And on it goes. It does not matter how esoteric your tastes, the market will cater to them. This is enormously gratifying for anyone who has the $10 for lunch or an album.

Contrast that with the democratic process. Here you have to compromise. Again and again. You're more liberal? You have to negotiate between the definition of a liberal offered by Bernie Sanders and the one offered by Hillary Clinton. You are more conservative? You have to negotiate between the definition offered by Ted Cruz or Jeb Bush or Donald Trump. And once you compromise your ideals to finally put your support behind a Clinton or a Trump, you now face a process that threatens to offer you a president who is not just sort of different from what you'd hoped but is enormously different. In the Venn Diagram that shows the characteristics that appeal to their voters, it is hard to imagine much overlap between Hillary and Donald. This 49% probability of getting a politician who is so different from you is enormously frustrating for anyone who has a vote.

The market has taught us to have it our way. Democracies teach us that after enormous compromise on what we really want, we still have only about a 50% chance of getting even that. And of course given checks and balances, even sending someone into the Oval Office or Congress is no guarantee that you'll experience the policies they'd promise to fight for. If you have enough money, you have about a 90% chance of getting just what you want. If you have a vote, you have about a 10% of getting just what you want.

Until we all vote for our own virtual reality, this difference between giving the individual exactly what she wants and forcing her to yield on so much that matters is going to create anger. Politics may not be more divisive: it may just be that we're all so used to the market responding to our requests with clarifications ("Would you like fries with that?"), that we are shocked that the political process responds to our requests with "No." It feels divisive because we're not just deciding to have ramen for lunch but can't actually order lunch until everyone has agreed to ramen.

Economics at its best is wonderful because it lets individuals emerge. One of the greatest signs of progress is that we have so many ways to now make a living. 200 years ago over 90% of the population farmed. Now only 3% do. And the types of jobs available goes up every decade. The market lets us become individuals both as producers and as consumers.

But we haven't properly educated people on the purpose of politics. It is not a forum in which you get to be more individual. It is a forum in which you become a part of a group. It's not a place where you assert your own views and individuality; it's a place where you find what you have in common with the people who live around you. It's not a place where you demand what you want. That's the path to millions of angry people shouting. Instead, it's a place where you explore what you have in common, jointly defining what it means to be a San Diegan or Californian or American.

Done properly, this tension between markets and democracies can be a huge comfort. On the one hand you get to explore what it means to follow your own path; on the other hand, you get to explore what it means to be part of a community. If all you did was the first, you'd be adrift. If all you did was the second, you'd be repressed. Creating a life out of the tension between what you want and what the people around you want is not easy but it is gratifying. One key to that is not to approach democracies with the same expectation as we do markets. They are very different, even if they do work so well together.

10 July 2016

How What We Did in 1920, 1964 and 1971 Helped Us to Avoid Tragedy in 2017

Trump easily leads among old white men.

So, because this country has given women (in 1920 when women in every state gained the right to vote), minorities (1964 - 1975, during which time blacks and Spanish speakers were guaranteed the vote) and 18 year olds (1971) a voice in this democracy, this country won't have President Trump. That, kids, is an example of (choose one or more depending on your religious or philosophical orientation)
  • Good karma
  • Reaping what you sow
  • Good things happening to good people
  • Further evidence that progress breeds more progress

08 July 2016

New Rule for Bad News?

Ramadan ended last week. Observant Muslims change their behavior for a month, fasting and praying. Each Sunday, observant Christians step out of their day to day routine to meditate on something other than the concerns of "this life." Old religions know the importance of shifting away from daily concerns to elevate thinking in order to enable a person to be more compassionate and intentional about a life. It might be worth borrowing from them even for communities not bound by a common religion.

What if - one week a month - you could only write negative things about what happened to you?

"When life gives you lemons, shut up and eat your lemons"

-             - Bumper sticker

I don't mean that you could only write negative things. I mean that you could not write about some tragedy or injustice that happened to someone else. If you actually witnessed - first hand - someone get shot, you would be expected to express outrage or sorrow over that. But if it happened outside of your own zone of experience - that is, if you depended on the media to be informed about it - then you can't discuss or write about it that week.

The problem with the 24-7 media is that there is no end of outrage and tragedy. Modern media is designed to sift through the actions of 7 billion people every moment to focus on the most tragic and maddening behavior. And the vast majority of what saddens or outrages us is something we would never know about in our own daily lives. It's easy to lose perspective and to think that this is a terrible world we're living in when in fact all that is happening is that we know so much more about what is going on in another state or country.

If you were forced to just look at what outrages and tragedies you faced, most likely your outrages would be petty. "That stupid barista. I clearly told him soy milk, not whole milk." "Did you see the way she changed lanes without even looking over her shoulder?" And the tragedies, too, would be small. "I got a cold today. In summer!" "I was so mortified. I tried to put on my comfortable jeans and they are now tight!"

Our lives are so much better than the media leads us to believe. I've said it before but I'll say it again: not only does the 24-7 media keep us steadily supplied with fodder for outrage and sadness but it rarely adds any historical perspective. Things are awful because of a terrorist attack that killed 100? 100 years ago Europe had plunged into World War 1, a travesty that killed millions. A news anchor just called the Dallas tragedy a modern 9/11. It's not. Not even close. Bad things happening is not incompatible with life getting better, even if the tone and urgency of news suggests it is.

It's not that these events that get reported on are not tragedies. They just aren't your tragedy. If we're obligated to feel sadness every time something tragic happens within 10,000 miles, where is the tragedy even in death? Ending lives that experience tragedy every day is actually a relief.

But what if just once a month for a week we were forced to meditate and report on only our own lives and what little problems most of us have most of the time? Or even more profitably, focused on the problems of the people around us, the problems we could know about first-hand rather through the somber voice of a stoic reporter? Those tragedies we can do something about and rather than make us feel helpless we'd feel responsible, able to help. And we would not only realize that our own lives were better than we were led to believe but would actually be more able to make other lives better.

The American Economy Created More than 2 Million Jobs Last Month

Today's job report announced an additional 281,000 jobs (the last two months were revised down by 6,000 and the initial estimate for June was 287,000) and an uptick in the unemployment rate.

This marks 69 uninterrupted months of job gains. We are now just one quarter - three months - off from a 6 year streak of job creation. The old record - set in the 1980s - was 4 years. Half again as long is huge.  The difference between the 2nd and 3rd longest streaks is 2 months; the difference between this current streak and the 2nd longest streak is nearly 2 years.

During this streak the American economy has created 14 million jobs.

In just the last year - since June of 2015 - the labor force has grown by 1.9 million and the number employed has grown by 2.4 million.

Here's something rarely mentioned about those job numbers. The 287,000 jobs announced today are net. Jobs are continually created and destroyed and each month the Bureau of Labor Statistics announces their best estimate on the difference between those two numbers as "the monthly jobs number." The latest figures we have on the total jobs created and destroyed is from the 3rd Q of 2015 and in that quarter the economy created an average of 2,430,667 jobs (about 2.4 million) and destroyed 2,291,333 jobs each month for a net gain of 139,000. Think about how dynamic that is. Every month we create and destroy millions of jobs. (Of course it's not as absurd when you realize that 2+ million is only 1.5% of the labor force.)

There are at least two things to conclude from this dynamism. One, in an economy this dynamic it's really important to have a strong safety net in the form of unemployment benefits and welfare and extensive, on-going investments in job training, education, vocational and professional training for employees at every stage of their careers. Two, given how dynamic this economy is, it's just just another reason to feel optimistic: every month the American economy creates about 2 million new jobs.

P.S. The uninterrupted streak of job creation could still end at 67 months. Why? With this month's revision, May's numbers are only 11,000 and with next month's final revision for May that could easily become a negative number. It may take us 2 months to realize that this streak is over.

05 July 2016

Trump's Campaign Has Already Won

Republicans and Democrats alike have fallen for the biggest ruse in American history: everyone thinks that Trump is actually running for president. He's not. He's running to take advantage of the fact that Americans' obsession with politics means that any serious candidate gets a windfall of free publicity that results in a brand name worth hundreds of millions, even billions.

fivethirtyeight projects Trump's odds of winning California at about 1%. And yet, Trump is investing in California, which is a silly move politically given he has limited funds. Meanwhile, he's not really campaigning like he should in states like Arizona, New Mexico and even Utah, which could vote Democrat for the first time in decades. It makes no sense for a candidate trying to get enough electoral votes to waste time and money on California and to ignore states that have traditionally gone Republican. It makes a lot of sense, though, if this is a marketing campaign and not a political campaign. California's economy is the sixth largest in the world. New Mexico is a tiny market. If you're trying to inflate your brand and net worth, it makes sense to focus on California and to ignore New Mexico.

Today, the FBI announced that there was nothing criminal in Clinton's handling of her email. Trump could have kept his supporters agitated about this but instead he announces at a rally today that Saddam Hussein was really good with terrorists, was really good for the Middle East. It's like every week (every other day?) he feels obligated to say or tweet at least one thing that will ensure that reasonable voters turn from him. 

If he wanted to win the presidency, so much of what he says and does is just stupid. If he wanted to win a ratings bonanza and all of the profits that come with that - everything he does is brilliant. I'm open to the possibility that he's an idiot savant who is brilliant at getting media attention but is an idiot when it comes to actual policies or even national politics. I am also open to the possibility that he's not nearly as dumb as the many Americans who think that he's actually running an election campaign instead of a marketing campaign. And that campaign he's already won.

The Odd Logic of Voters Who Believe that All Politicians Are Liars

And this is fascinating. If you believe that all politicians are liars then here is where that takes you.

Every outrageous thing that Trump promises (e.g., religious test for anyone wanting to enter the US or even anyone living here or dropping nuclear bombs) he's actually lying about.
Every reasonable thing Clinton promises, she's lying about.
Therefore, Clinton is not an intelligent, reasonable candidate but is instead dishonest and Trump is not crazy but is instead just lying.
So, given all politicians are liars, you have to support the guy who says the most outrageous stuff because he's not the one who'll do outrageous stuff - it's the one who promises to be reasonable.

Which isn't at all an outrageous thing to believe but is in fact quite reasonable. Or maybe not. Even bloggers might be liars. Right?

02 July 2016

American Exceptionalism and Why Being Born Here is All the Qualification Needed for Citizenship

Donald Trump has pointed out that the US is one of just a few countries that allows anyone born here to be a citizen. He thinks this is a bad idea.

In fact, this simple criteria gets to the heart of American exceptionalism. We're not an exceptional country because we - as people - are unique or different. Americans come from every continent, race, and religious background. We are exceptional because we believe that the right systems make people better.

By 2000, average income was about 6 to 8X what it was in 1900. And even this understates things. In 2000 there were a wide variety of wondrous things - from polio vaccines to airplane tickets - that you could buy that didn't exist 100 years earlier. This is not because the DNA of people in 2000 had miraculously changed or improved. It wasn't because people in 2000 were working harder or were more conscientious. It was because our systems were better. Drinkable water was available out of the tap. 14 year olds learned math.Children got vaccines. A host of social and technological inventions made life - and people - better.

In the US, we believe that the right systems can make anyone better, regardless of their gender or race. It's not the evolution of genes that make life better now; it's the evolution of memes, the social norms, practices, beliefs, and institutions that define our daily life.

It's our belief that all men are created equal and that they are made different by the memes they are taught and create.

01 July 2016

Income Growth its Highest Since 1998 (Or, Why Wages Are Finally Growing)

In the first half of this decade, unemployment came back down to normal. In the last half of this decade, income growth will return to normal. I've made this argument before at R World, and recent data from the IRS supports it.

At EquitableGrowth.org, they report that in 2015 income for the bottom 99th percent grew by 3.9% after inflation. From 2009 to 2013, incomes were nearly stagnant - going up only 1.1%, after falling from 2007 to 2009.

There is no magic in this. Many pundits who were commenting on the job growth numbers in the first half of this decade would "yeah but" the growth with "income growth is still stagnant."

There was nothing unusual about this.  First of all, data on income growth lags job creation numbers. The IRS is only now beginning to report on 2015. Secondly, when unemployment is higher than average, there is little need to raise wages. You don't have to offer an unemployed guy much money to get him to say yes to a job offer. By contrast, you do have to sweeten an offer made to a guy who you are trying to lure away from another job.

In 2012, the unemployment rate was averaged 8.1%. Income growth was negligible.

By 2015, the unemployment rate averaged 5.3%, Income growth was the highest it has been since 1998.

With the unemployment rate under 5% this year, wage growth could be even higher.

Perhaps we can finally say that the recovery is over and now we are simply experiencing growth. It's taken a long time to get here.