Category Archives: Politics

Negative Carbon Taxation

Carbon taxes are basically the perfect policy. Set a desired maximum level of carbon output, estimate the tax needed to get to that level, and levy it. Adjust as needed to keep at target level, which should itself be gradually declining. That’s all pretty standard.

A thought occurred to me today that a nice improvement would be to include a “negative carbon tax” in the package. The idea would be to make adding carbon to the atmosphere and taking carbon out of the atmosphere equivalent. Whatever amount you would have to pay for emitting a certain amount of carbon, you’d receive for taking that amount of carbon out of the atmosphere. So if you see an opportunity to remove carbon from the atmosphere, you’d have an incentive to take it and get paid. And indeed, a whole carbon capture industry could come into being, effectively getting paid by the government to remove carbon from the atmosphere on whatever scale they can manage. This could of course be paid for by the carbon tax, which would by definition be plenty of money as long as more carbon is being emitted than is being removed.

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Libertarians and Anti-Trust

Libertarianism is a fundamentally incoherent ideology. It only makes sense if you hold certain assumptions that just aren’t true. The core one of these is the assumption that perfectly free markets will naturally be competitive. The libertarian idea is that monopolies and oligopolies and that sort of thing can only result from government intervention, and that if there was no government every market would be competitive and efficient. This used to be a pretty plausible thing to believe back when it was first thought up in the 1800s. But now we know that’s just not how things work. Government can certainly intervene to create monopolies or hurt competitiveness, but they’re not required. It’s perfectly possible for businesses to use economies of scale and shady deals with other businesses to destroy competition in whatever market they’re in without any help from the government. And meanwhile, the government is the only entity with the power to break up monopolies, and prevent them from forming in the first place.

Competitive markets are an incredibly powerful tool for promoting innovation and efficiency. However, they’re also an incredibly delicate tool that needs careful maintenance. If left to their own devices they break and turn into a series of rent seeking monopolies and oligopolies. There’s a real debate to be had about the merits of markets versus central planning. What’s not really debatable is that if you’re using markets you need to keep them working properly or you have the worst of both worlds: one big organization without the pressure of competition running everything, but controlled by rent-seeking capitalists rather than planners who are at least trying to produce good outcomes.


Political Coalitions

I define people who are basically on my team politically like this. We agree on a basic humanist, consequentialist worldview of wanting to produce the greatest good for the greatest number of people. And we agree that the basic plan for how to accomplish that is to organize politically, take control of the state, and use state power to transform society in a positive way. We agree that what that basically looks like is increasing the size of the welfare state and democratizing decision making in both the public and private sectors.

And that’s it! We might disagree on the details, but if the above describes you then you are my ally in that project. If it doesn’t then we can still totally be in coalitions together, but eventually there’s something serious that we’re going to have to fight about.


Right-Left Progressive-Conservative

People use political labels pretty haphazardly, it is what it is. There’s no real right or wrong definitions, but we can aim for ones that at least cut reality at the joints and illuminate more than they obscure about the people they’re labeling. So here are my definitions:

Right-Left: To be on the right means to be in favor of concentrated wealth and power. To be on the left means to be in favor of dispersing wealth and power widely.

Progressive-Conservative: To be a progressive means to be part of a political movement to make positive change. To be a conservative means to be against whatever it is the current progressive movement wants to do. We can also add “reactionary” to this category, which is actually pretty similar to progressive except the change they want to make involves a reversion to a real or imagined past state of affairs.

Liberal-Authoritarian: To be liberal means to be tolerant and have a “live and let live” attitude. To be an authoritarian means to believe that there are correct and incorrect ways of doing things that need to be enforced.

I would consider myself a left-progressive-liberal. I’d say the modern Democratic Party are mostly centrist conservative liberals, while the modern Republican Party is composed of right-wing reactionary authoritarians. I call the Democrats conservatives because they’re for the most part just trying to defend the gains of past progressive ages rather than make any particular new ones. Even the new policy prescriptions they have are mostly about shoring up systems that are coming apart (healthcare anyone?) rather than embarking on some bold new plan to improve people’s lives.

The American culture wars are pretty much fought based on the liberal-authoritarian axis, on which the country has been steadily moving in the liberal direction for decades. And really that’s for the most part what elections are won and lost on, since those tribal culture war issues are what really seems to get people riled up. Meanwhile we’ve been moving to the right for a few decades despite there not really being much of a popular outcry for doing so because that’s what the right-reactionaries driving the Republican Party really care about.

 


The State of the Economy

After the financial crisis central banks lowered interest rates as far as they could. This has the effect of stimulating more lending, which creates more money, which then gets spent. The idea is that the money will be invested and this should stimulate the economy because that investment will entail employing people, utilizing resources, building, doing, etc. It should put the spare capacity in the economy to work.

The problem is that that’s not what happened with most of that money. A little leaks out into the real economy, but in general there’s no profit in investing in expanding productive capacity, because our whole problem is that demand is too weak. If factories are already operating at half capacity, why invest in building new factories? So instead of being spent on investments that require buying goods and services, it’s been spent on buying assets. It’s spent on real estate, stocks, gold, bitcoin, bonds, etc. This can be a great financial decision for the investors, but buying more of all that stuff doesn’t put any spare capacity in the economy to work, it just raises the price of that asset class.

So now we have gigantic bubbles in every conceivable asset class, but still a lot of spare capacity in the economy. The Fed is raising interest rates because they’re worried about those bubbles, while people who care about the real economy are saying “Are you crazy? You’re reducing the stimulus now when the economy’s still so fragile?” This is a hard decision for the Fed, since there’s no action they can take that won’t make one of those two major problems worse.

Luckily for those of us who don’t work at that Fed, there is a silver bullet we can use to solve this problem. It’s just not anything the Fed has access to. The way to fix things is with fiscal rather than monetary stimulus. Rather than throwing up our hands and saying “How can we possibly get businesses to use this spare capacity?” we just have the government use it directly. This can come in the form of handing out money to people through the welfare state in order to boost both demand and their living standards, or in the form of spending government money on the infinity of badly needed public goods that have gone underfunded for decades.

You might say “But wait! How can we afford all this?” That’s a stupid question! Just kidding. But seriously, the federal government is in charge of money. It owns the literal and metaphorical printing presses. It’s literally not possible for it to be unable to afford things. The only limitation is that printing too much money can cause inflation. Luckily though we have a great tool for combatting inflation: raising interest rates! As you may remember, that’s what the Fed desperately wants to do now even though inflation has remained low, because it’s what’s needed to deflate these crazy asset bubbles.

This has all been about our specific current situation, but it’s also a thesis on a shift we need to make in how we think about government spending. Currently the idea is that the Fed sets interest rates at the sweet spot where it utilizes the economy’s spare capacity without going overboard and causing inflation and bubbles. Government spending is treated as just one more source of demand in the economy among others, and is constrained by the need to borrow money at whatever interest rate the Fed sets. What we need to do is have government spending come first. We spend as much as is needed to make sure that the economy is running at full capacity all the time. And then we use interest rates to control bubbles and inflation without worrying that if rates go high it will result in wasted capacity and the accompanying unemployment and economic distress that comes with it.


Larry Summers wants to know: are you an insider or an outsider?

Larry Summers really likes to ask people whether they want to be outsiders, who can speak the truth but can’t have power, or insiders who can have power as long as they don’t say anything that’s unacceptable to the oligarchy. Who knows how many people he’s asked that question. We only know about the ones that have answered “outsider” so firmly that they then tell the world about the question being asked.

In her book released [2014], Sen. Elizabeth Warren recounted a dinner she had with President Obama’s chief economic adviser, Larry Summers, in April 2009, when Warren was the outspoken chairman of a congressionally appointed panel probing the government’s response to the financial crisis.

Larry leaned back in his chair and offered me some advice. … He teed it up this way: I had a choice. I could be an insider or I could be an outsider. Outsiders can say whatever they want. But people on the inside don’t listen to them. Insiders, however, get lots of access and a chance to push their ideas. People — powerful people — listen to what they have to say. But insiders also understand one unbreakable rule. They don’t criticize other insiders.

I had been warned.

Warren ignored the warning.”

Source: https://www.washingtonpost.com/news/wonk/wp/2014/12/14/elizabeth-warren-is-changing-washington-without-giving-up-her-outside-status/?utm_term=.6808511df256

“[Varoufakis] dramatises his intent throughout the crisis with a telling anecdote. He’s in Washington for a meeting with Larry Summers, the former US treasury secretary and Obama confidant. Summers asks him point blank: do you want to be on the inside or the outside? “Outsiders prioritise their freedom to speak their version of the truth. The price is that they are ignored by the insiders, who make the important decisions,” Summers warns.

Elected politicians have little power; Wall Street and a network of hedge funds, billionaires and media owners have the real power, and the art of being in politics is to recognise this as a fact of life and achieve what you can without disrupting the system. That was the offer. Varoufakis not only rejected it – by describing it in frank detail now, he is arming us against the stupidity of the left’s occasional fantasies that the system built by neoliberalism can somehow bend or compromise to our desire for social justice.”

Source: https://www.theguardian.com/books/2017/may/03/yanis-varoufakis-greece-greatest-political-memoir

 

Summers is right to ask that question; it’s an important one. But where he’s wrong is that he implies that “insider” is a morally acceptable answer. If you’re an insider in the sense he means you’re an ally of the oligarchy and thus an enemy of everyone else. And as Warren has demonstrated, you don’t have to be an insider to succeed in politics anymore. The insiders are a lot richer and better organized, but there are a lot more outsiders. We’re coming.

 


Mainstream Worldviews

Everyone has a worldview. It’s the framework through which you understand the world, and into which you assimilate new knowledge. One worldview can be more accurate than another (modern scientific rationality versus all previous worldviews for example), but it’s also common for two worldviews to each get different things right and wrong (classical Mayans knowing more about astronomy but less about metallurgy than Europeans for example). If everyone you hang around with has a basically similar worldview to yours, it doesn’t really even seem like a worldview at all; it’s just the way the world works.

That’s what has happened to the mainstream media and to the people who get their news exclusively from it. The mainstream media (Network news, CNN, NBC, New York Times, Washington Post, etc.) all reflect the same basic liberal corporate centrist worldview (left neoliberalism). The last few decades have seen the rise of another popular media worldview: the conservative corporate hard-right worldview (right neoliberalism) pushed by Fox News and the rest of the Murdoch media empire. And more recently we have seen the rise of the internet creating opportunities for a lot more media worldviews, primarily the too-racist-for-Fox alt-right worldview and the whole gamut of possibilities to the left of the mainstream that had previously been shut out of the conversation.

To people who still exist purely within the mainstream media worldview this looks like everybody who is exiting that worldview is just going crazy. They’re starting to have beliefs that the mainstream media worldview says are incorrect. It leads them to talk about a “post-truth” world and fret about how we can’t agree on facts anymore. What they’re missing is that there was never an agreement on the facts, just a situation where the media was united around one interpretation. Meanwhile the people exiting that worldview to the new alternatives feel like they’re waking up to the mainstream media’s lies and have now found the truth. To be fair to the exiters, the mainstream media worldview is very flawed. To be fair to the mainstream media, most of the alternative worldviews people are leaving for are at least as flawed, often way more.

We’re going to have to get used to a world where people choose media sources based on agreement with their worldview. Other sources feel like they’re lying to you by reporting based on assumptions you don’t share. People who agree with the mainstream media worldview are bummed that everyone’s no longer forced to hear reporting from their perspective, but the rest of us will be able to hear reporting from a perspective we share.  And that’s not so bad.