pro-caligula roman:
you people are unbelievable. every single thing gaius does, you call tyranny. he breathes and suddenly it’s “the republic is dead.” this is pure caligula derangement syndrome.

anti-caligula roman:
he declared war on the sea.

pro:
no, see, that’s exactly what i’m talking about. you take one symbolic military gesture, rip it out of context, and then act like he’s insane. maybe he’s sending a message to neptune. maybe it’s strategic ambiguity. ever think of that?

anti:
he also made his horse a priest.

pro:
allegedly. and honestly? have you seen the senate lately? the horse might be more qualified.

anti:
he’s humiliating the institutions of rome on purpose.

pro:
good. the institutions are corrupt. that’s why people love him. he fights for ordinary romans while you aristocrats clutch your pearls over “norms.”

anti:
ordinary romans do not benefit from watching the princeps dress up as bacchus and threaten consuls.

pro:
ordinary romans LOVE spectacle. they love games, grain, and a leader who doesn’t bow to the establishment. you just hate him because he says what everyone else is too afraid to say.

anti:
what exactly is he saying?

pro:
that the old elite failed. that the senators are weak. that rome needs strength. and frankly, he’s right.

anti:
strength is not the same thing as erratic cruelty.

pro:
there you go again. every rumor, every palace whisper, you repeat it like gospel. “cruelty,” “madness,” “decadence.” you people have been predicting the fall of rome since the day he took office.

anti:
he had men executed over personal insults.

pro:
and? maybe don’t insult the head of state in a fragile geopolitical moment. actions have consequences. the empire has enemies, in case you’ve forgotten while attending your little dinner parties on the palatine.

anti:
this is what you always do. he behaves monstrously, and you turn it into a culture-war issue.

pro:
because it IS a culture-war issue. the people are finally represented, and the old class cannot stand it. you preferred tiberius skulking around capri while the bureaucracy quietly strangled the state. caligula actually does things.

anti:
name one good thing.

pro:
restored public energy. connected with the masses. shattered senatorial complacency. redefined imperial masculinity.

anti:
“redefined imperial masculinity” is not governance.

pro:
that’s your problem. you’re stuck in outdated republican frameworks. politics is performance now. symbolism matters. presence matters. vibes matter.

anti:
“vibes matter” is how republics die.

pro:
lol no, republics die when bitter elites refuse to accept a popular mandate.

anti:
popular mandate? he was the son of germanicus. he inherited goodwill and converted it into paranoia.

pro:
so now being beloved by the people is a crime? interesting.

anti:
being beloved is not the issue. being a dangerous narcissist is.

pro:
dangerous according to whom? senators? courtiers? historians who all hated him? funny how every source comes from people who lost status once he stopped pretending they were important.

anti:
he literally said he wished the roman people had one neck.

pro:
hyperbole. you’ve never said something heated? gods, the selective outrage. when your side talks about crushing enemies, it’s statesmanship. when gaius does it, suddenly it’s the end times.

anti:
he keeps testing how much degradation everyone will tolerate.

pro:
and you’re proving his point by melting down over everything. this is why nobody takes you seriously. emperor says something provocative, and within seconds it’s “we are under tyranny.” classic cds.

anti:
cds?

pro:
caligula derangement syndrome. total inability to assess the man rationally. terminal case, afaict.

anti:
rationally? he’s bankrupting the treasury to stage floating palaces and cosplay as a god.

pro:
first, infrastructure. second, religious innovation. third, why are you so threatened by confidence?

anti:
because confidence is not competence.

pro:
to you. to the people, it looks like leadership.

anti:
to the people, bread looks like leadership.

pro:
exactly. finally, some honesty. you’re mad he understands politics better than the senate does.

anti:
no, i’m mad that rome is being run by an unwell actor with absolute power.

pro:
and i’m mad that every time he tries to make rome great again, you freaks sabotage him and then blame him for the chaos.

anti:
did you just say “make rome great again.”

pro:
yes. and it’s working.

anti:
the palace is on fire.

pro:
fake news.

Naturally, the conclusion is that there is a sex addiction epidemic. Some of the main characters are brought to a center where they can be treated for sex addiction. Here they meet other lovable sex addicts such as Michael Douglas, Bill Clinton, and David Letterman.

Unfortunately, all attempts at treatment fail. Sex addiction appears to be untreatable with simple means - men just refuse to let go of their desire to have sex with absurd numbers of women. After careful deliberation, government officials realize the structural cause of why men like sex: an alien wizard has cast a spell.

The episode ends with special forces storming Independence Hall and killing the alien wizard responsible for men’s sex drives. And they all lived happily ever after.

Now, being a proper 11 year old, I understood the joke: men are basically monkeys. We’re just evolutionarily desperate to have sex. Polite modern society manages to put a lid on inappropriate behavior, but when men find themselves in positions of power, they quite frequently use their vast resources for sex.

What I did not understand was that South Park was making fun of real people. That there were actual people in the United States (and likely elsewhere) who put their heads in the sand and denied this.

Then came the Epstein files. The DOJ released millions of pages of documents on the Jeffrey Epstein case. As we already knew, Epstein had sex with minors. But many have found another shocking revelation: rich, successful, powerful people were friends with Epstein and often cheated on their wives. Epstein often gave them relationship advice. Bill Clinton, Bill Gates, Noam Chomsky, Stephen Bannon, the list goes on.

It’s as if every conspiracy theory about an elite sex ring has been simultaneously confirmed. Sort of…Not really. For the cynical eye, none of this is all that surprising. A single look at Steve Bannon should make it obvious that he’s definitely a horny dude. We already knew about Bill Gates’ relationship with Epstein and please don’t get me started on Bill Clinton.

I think this is what led Quilette founder Claire Lehmann to refer to the Epstein file dump as “boring”. Sure, we now have pictures of Brett Reiner and Epstein with women, but there is zero credible evidence of criminal wrongdoing by anyone else. There’s a reason no one has been charged.

Don’t get me wrong, I’m willing to believe that some of the people mentioned in the Epstein files also broke the law. The same monkey-brain that leads men to cheat also leads them to attraction to 17 year olds. Famous sportsmen have often been implicated in having sex with underage prostitutes and we all know about Polanski and Woody Allen.

Nor do I find the story “boring” as Claire does. I think it provides a good amount of entertainment value. In good part owing to Elon Musk’s complete social incompetence and inability to grasp Epstein’s hints. But there is an element to the story that feels like one big South Park episode. Society spends seven years obsessing over an elite pedophile ring and eventually discovers that…many powerful men cheat on their wives.

And there is of course reason to be concerned by how men behave. When getting married you say “till death do us part”. Really? You said those words and then cheated on your wife with Stormy Daniels? Infidelity ruins relationships, households, messes up children, yada-yada. But we already knew all that. And that’s all we got. We did not get an elite pedophile child trafficking ring. We got Elon trying to get laid. The man has 14 confirmed children. What else is new?

Neither am I all that surprised by the reaction to the Epstein files. People are desperate for rich people to all be evil and ruining our lives. After all, that would mean that there’s a simple way to improve society: get rid of the evil powerful individuals on top! But if there’s no cabal running the world, then how can we quickly fix our problems?

If our problems don’t come from the Jews controlling the media, communists turning the kids trans, or billionaires not paying their taxes, then there’s no simple solution to society’s ills. We’ll be stuck making incremental progress forever with 2% economic growth. The human brain hates that idea. We want progress yesterday. Radical ideologies that blame your inability to get a girlfriend on George Soros are able to promise you that progress quickly. Meanwhile the centrist peddling small changes to the income tax system for marginal efficiency gains just doesn’t seem that sexy.

And as we’ve already established, men all have monkey-brains craving sex.

This trend has coincided with a strong interest in wellness. People are drinking less, going to the gym more, and spending a lot more time obsessing over protein. We’ve even gotten to the point where the wealthy are thinking of ways to become immortal. The most famous example of this is, of course, Bryan Johnson. The billionaire founder of Venmo who made a name for himself after doing blood transfusions from his son. More importantly, Bryan Johnson lives a strict regimen where the goal is to slow down his speed of aging. His hope is to eventually defeat cheat death and, well, live forever.

I have no problem with this. I hope he succeeds and we all live happily ever after and never die.

But the realm of healthcare has counter-intuitive and unfortunate effects on the realm of politics. Let’s begin with exhibit A:

As you may realize, if Bryan Johnson and Substack/Twitter user @neocentrist are able to become immortal through a combination of high-tech solutions and lifestyle changes, the same interventions will doubtless be available to the numerous autocrats around the world. The likes of Putin, Xi, Kim, and Khamenei have access to far greater resources than any of us. They not only have $80 of yearly substack revenue (which I would love more of, by the way) or even a billion-dollar app they sold, but entire nation-states under their control. Chances are that they can achieve any longevity goal that’s feasible. Be it extending their lives to 150 or immortality.

This, I have a problem with.

Authoritarian systems are pretty messy to deal with as is. The primary way they collapse or improve is through the death of their leaders. Here you should be thinking of Stalin’s death carving the way for Khrushchev’s reforms or Mao’s death making it possible for China to eventually liberalize under Deng. When the strongman leader goes away, his previous subordinates are usually unable to wield the same power he did. The elites balance amongst themselves and create institutions to make sure that nobody else threatens them like the strongman did. Under certain circumstances, they are unable to coordinate and the public is actually able to ram democracy through. Well, sometimes that happens.

In fact, death is the normal form of power change under authoritarianism. 40% of leadership changes under autocracies occur when the leader dies. Another large chunk is leaders abiding by term limits or resigning because they feel too old to keep governing. In other words, the vast majority of leader turnover we observe today might simply end if modern medicine continues to improve at its current rapid pace.

So we have one huge problem: autocrats might not die anymore. And if they don’t die, the hopes of countries such as North Korea or China improving are slim to nil. Popular revolutions, despite what the Internet may lead you to believe, only account for about 10% of regime change in autocracies (and that conditional on the leadership change being non-procedural). So…what now?

Unfortunately, this is not the end of the story.

Longevity and modern medicine will not only stall the collapse of authoritarianism, but they are likely to help democratic backsliding as well. My older readers may remember my post from a year ago, where I explained that gerontocracy has the silver lining of making it unlikely that the ruler attempts to usurp more power. In other words, Donald Trump would have been far more likely to run for a third term if he were 50 years old. Trump’s age is the primary factor limiting the rise of authoritarianism in America today.

To understand this, note that the benefits of trying to usurp power are much larger for a 50 year old than an 80 year old. The 50 year old has another 30 years of uninterrupted rule ahead of him. In contrast, the 80 year old realizes that they’re going to be dead soon anyway and has far less to gain from ending American (or another country’s) democracy.

But what happens in a world where leaders expect to live until they’re 150? Or one where they expect to never die? You know the answer: the incentives towards becoming an autocrat rise. The Donald Trump of 2048 chooses to run for a third term.

This problem has no obvious solution. Medicine is rightfully uncompromising in its search for longevity. Likewise, there is no obvious fix to either stop democratic backsliding or get rid of authoritarians around the world. So it goes.

Here I will attempt to convince you that Powell has been a good Chairman of the Fed. And, if anything, has erred on the side of leaving interest rates too low, not too high. I will also give a forewarning of what can go wrong in case the Fed loses its independence.

Early Issues

Powell took the office of Fed Chair in 2018. The first two years of his chairmanship were fairly standard. Powell continued Janet Yellen’s policy of raising the Federal Funds Rate from the zero level it had hit during the Great Recession. In 2019, this drew the ire of Trump, who claimed that Powell was keeping the stock market down and that easier policy from Powell would have resulted in larger GDP gains, with little to no inflation.

There are some criticisms to be made of Powell’s decisions at this point. In 2019 the inflation rate was persistently under target, but higher inflation was clearly not Trump’s goal. Lower interest rates would have likely failed at stimulating the economy given that unemployment was near 3.5% and nominal GDP was growing at a 4% yearly rate, which is the rate of demand increase consistent with 2% inflation in the long run, given the economy’s 2% productivity growth.

Courage to Act

Powell’s true test came a year later amidst the Covid-19 Pandemic. The US economy quickly crashed with unemployment peaking at almost 15%. Immediately this spawned discussions of how the recovery would look. Economists split into camps predicting that the aftermath of the virus would result in either a “V-shaped” recession, or an “L-shaped” recession. The former refers to a swift recovery where the economy quickly drops and quickly rebounds, such as during the Reagan years. The latter refers to a drawn-out and slow growth path such as in the aftermath of the 2008 financial crisis.

For those who understand monetary policy, the correct answer was obvious: it depends on the Fed. There is no fundamental reason why the Great Depression or the Great Recession of 2008 had to be “Great”. Both were driven by major central bank errors. Since this is not a post regarding either crisis, I will be brief: the prevailing reason for the Great Depression relates to the Federal Reserve allowing the broad money supply (M2) to drop significantly. This led to a collapse in spending, which automatically implies a collapse in nominal incomes (because one man’s spending is another man’s income). The collapse in nominal incomes induces firms to either (1) lower pay or (2) fire workers. We know that firms are extremely reluctant to lower wages, as such they fire workers. This results in greater reductions in spending, and the cycle continues. It did not matter that interest rates also fell, they did not indicate loose monetary policy, but rather deteriorating economic conditions.

This view is not controversial. It was developed by Milton Friedman and Anna Schwartz in their seminal work A Monetary History of the United States. Later authors such as Romer & Romer agreed that the end of the Great Depression was also due to looser monetary policy. In fact, the most popular person to agree with this point is none other than Ben Bernanke, 2022 economics Nobel Laureate and Fed Chairman during the 2008 crisis. Bernanke, speaking at Friedman’s ninetieth birthday famously said: “I would like to say to Milton and Anna: Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.”

And then, they did it again.

Bernanke, refusing to make the same mistakes as the Federal Reserve of the 1920s and 30s, conducted significantly looser monetary policy during the Great Recession. He understood a simple truth: interest rates are not the same as monetary policy. Lowering interest rates may not be enough to stop a crisis if the rate necessary to stimulate spending is falling even faster (for a more detailed explanation of this, see my post here). As a result, Bernanke, by adding on top his now trademark policy of quantitative easing, was able to stabilize the M2 money supply (Friedman’s favourite metric), but failed in stabilizing its growth rate.

Through Bernanke’s efforts, which saw great public and institutional resistance at the time, the United States avoided a second Great Depression, but was unable to recover from the crisis quickly. Nominal GDP growth lagged behind, and the Fed ultimately remained behind the curve. Bernanke was likely the ideal person for the job, having spent his entire life studying a similar crisis, but even he was unable to force through the changes necessary to recover from a major economic crisis.

Enter: Powell 2020.

As Covid shocked the world, Powell faced the same issues as previous Fed Chairs in similar circumstances. How can one stabilize the economy if interest rates are already at zero and have no room to go lower? Bernanke’s answer had been quantitative easing, but it had proved insufficient. As many would argue, Bernanke’s quantitative easing simply included swapping bonds that already paid 0% interest for cash, which also paid 0% interest. As a result, its stimulative effects were benign. Furthermore, the Federal Reserve maintained a 2% target for inflation, if quantitative easing were to have a truly large effect on demand, the financial sector expected that the Fed would turn and quickly tighten policy to get inflation under control. This implied that short-term decisions may not be enough.

To combat this conundrum, Powell made two important changes. The first was a switch to “flexible average inflation targeting”. This meant that the Federal Reserve would make up for missing its inflation target in previous years. If inflation undershot by 1%, the Fed would aim for an extra 1% inflation in the next few years. This seemingly small tweak had massive consequences: at 0% nominal interest rates, the public could now expect higher inflation. Meaning that real interest rates would go down. And if the Fed kept undershooting its target, the commitment to higher inflation became even greater. This solved the issue that worried the financial sector: higher inflation would no longer be met with immediate tightening.

The second issue was that the Fed needed to signal its willingness to do whatever it takes to stimulate the economy. As Bernanke said in a speech from 2000, if the central bank indicates a willingness to buy up all the assets in the world, then spending must increase, or we’ll end up in paradoxical circumstances where the central bank owns the planet. Powell, not afraid of bold moves, indicated his willingness to do whatever it takes by starting purchases of corporate bonds, something that was hitherto unheard of. This move remains controversial and may have even been unnecessary, but made clear that the Fed would stop at nothing to return the economy to good health.

The result was, by all means, a historic success. By end of 2021, unemployment was already under 4%. It had taken the United States ten years after the Great Recession to achieve that point.

Loosey Goosey

As the economy continued to recover, many analysts (most famously Larry Summers and Olivier Blanchard) noted that inflation had gone above target and predicted that it would not fall. The economics profession split into two broad camps: team persistent and team transitory. The former believed that inflation was here to stay and that (1) the government should refrain from further fiscal stimulus (2) the Fed needed to raise interest rates now. The latter group claimed that inflation had been caused by temporary factors that would sort themselves out.

This is where Powell made his biggest mistake. The Fed implicitly adopted the “team transitory” position for much of 2021, keeping interest rates at 0% and even continuing to engage in quantitative easing! This transpired even as nominal GDP was growing at double-digit rates, unemployment was below 4%, and the PCE price index was growing at 6% yearly rates.

But even more importantly, the Powell Fed messed up its framework. The “flexible average inflation targeting” framework developed earlier was extremely well-equipped to deal with these circumstances. Even if the Fed were wrong about transitory inflation, its commitment to average inflation targeting would have meant that overshoots of its target would be followed by sub-2% inflation in following years. This would result in a fall in inflation expectations and make the disinflation that much easier. Unfortunately, the Fed indicated that overshoots would not be followed by undershoots, effectively making “flexible average inflation targeting” into some strange asymmetric price level target. This killed the chance for a swift disinflation.

Once in a Lifetime

Despite Powell’s major mistakes in the early inflationary period, the Fed soon reversed course and began to rapidly raise interest rates. Sometimes raising rates by 0.75%, something that US policymakers had shied away from. Though Powell was playing a suboptimal strategy having abandoned FAIT, he performed a miracle of monetary policy: despite broad forecasts of an impending recession and unemployment, Powell raised rates to a staggering range of 5.25-5.5% while unemployment did not go above 4.2% (at least until Liberty Day).

This is no mean feat. Paul Volcker’s attempts at disinflation resulted in a peak unemployment rate of 10.8%. Even when he and Reagan achieved “Morning in America”, inflation was above 4%, with unemployment shy of 8%. Numbers that would shock the American consumer today.

Powell’s “soft landing” was a once-in-a-generational achievement. Its primary cause was the Fed’s credibility. Disinflations cause unemployment largely because nominal GDP growth falls far below what people expected. This means that firms bring in less income than they had planned, leading to firings. But if inflationary periods do not result in higher expected inflation, then lowering inflation can be near-costless because firms never begin to expect unrealistic nominal income growth in the first place. I made this case in 2023, arguing that a soft landing was close.

But today, the Trump administration threatens a Federal Reserve Chairman who has been historically successful. Powell, for all his mistakes in 2021, showed us how a simple framework change can lead to a rapid recovery from a major global disruption. His careful decision making largely made up for his mistakes during the inflationary surge and made good use of the Fed’s reputation. It is precisely that reputation that the Trump administration may unintentionally destroy.

If the Chairman of the Fed becomes subservient to the President’s wishes, then the consequences could be disastrous. First, the central bank will have an “inflationary bias”, an urge to pursue loose monetary policy for short-term political gain. The United States went through this when the Nixon administration applied pressure to then-Chairman Arthur Burns, resulting in the debacle of the 70s. Second, the Fed would lose its credibility as an inflation-fighter. This would make future disinflations extremely painful. If the public stops believing in the Fed’s 2% inflation target, then a soft landing like in 2023-2024 will become impossible - future landings will involve high unemployment and a recessionary shock.

Finally, one need not look far and back. Just a few years ago, President Erdogan of Turkey decided that central bankers were unintelligent and should simply lower interest rates since that had to be good. The result was not great.

The answer is yes. The US defense budget is not as large as people believe. It is not the primary cause of the country’s fiscal issues and it is likely insufficient to counter the rising threat of China and an increasingly belligerent Russia.

Purchasing Power

The big fallacy people commit when calculating military expenditures is forgetting to adjust for purchasing power. People understand quite well that goods cost different amounts in different countries. Services even moreso. The military budget is a combination of both, so we should naturally try to adjust for purchasing power. This gives us a very different picture:

The United States remains in first place, but clearly cannot eclipse the combined spending of the next ten. It’s just above the spending of Russia and China.

But even these numbers do not tell the full story. Because of the large discrepancies in military personnel pay mean that the size of each country’s army is quite different from the military budget.

Now the US is far eclipsed by its adversaries. Of course, America’s technological superiority, intelligence, and cyber capabilities make up for this. But you should be starting to see that the mainstream narrative of “more than the next nine countries combined” is suspect.

But fine, these are just numbers pulled out of a hat. Why should you actually care about US military spending? One answer is that the US now faces a few key adversaries around the world. Russia, who is still invading Ukraine and continues to threaten NATO if the United States blinks; China, which has its gunsights on Taiwan and is preparing for its moment in the sun; Iran, which has recently become much weaker, but is a permanent concern for US Middle-Eastern policy. Given the global nature of US foreign interests, Pentagon policy during the Cold War advocated for a “Two-Theatre War” capability. Meaning that the United States should be powerful enough to engage in two major conflicts in different areas of the world. Ukraine and Taiwan being case in point.

Today that policy is very much violated. The US has been depleting its weapons stockpiles while supplying Ukraine, even as the conflict has cost the country a grand total of 0.1% of GDP per year. It’s difficult to believe that a country depleting its interceptor missile stockpiles through supplying Ukraine would be able to engage in a Two-Theatre War. Perhaps not even a 1.5 Theatre War. This problem is amplified when one looks at shipbuilding, an obviously vital part of a maritime nation’s power.

Do you see that? China accounts for half the world’s shipbuilding, while the US accounts for 0.1%. This is not the behavior of a country that is ready to deter great power war.

The Cost

OK fine, but what about the costs? It may very well be that the United States would benefit from increasing military spending to counter its adversaries, but what if it simply cannot afford to do so? Let’s unpack this. I’ll start with a simple graph displaying US defense spending as a proportion of GDP.

As you may notice, US military spending as a proportion of national income peaked during the height of the Cold War at 16%. Since then, it has been steadily falling and now constitutes a meager 3.7% of GDP. Much lower than the 5% of GDP threshold that Trump is pushing NATO countries to adopt. In fact, it’s right at the level where an increase to $1.5 Trillion would push the country above that threshold. Coincidence?

But fine, fine. Even if defense spending is a small proportion of GDP, is it not still a huge part of the Federal Budget? Something like half? Yes, but also no. Defense spending is indeed close to half of the discretionary budget, but it is just 12% of the full federal budget.

And as you can see from above, the real culprit of US overspending is social security, medicare, and medicaid. In fact, defense spending comes after net interest on the debt. Meaning that even a complete elimination of the US military would not be enough to balance the budget. If you’re looking for something to explain why the US is on the road to fiscal hell, defense is the wrong answer.

Conclusion

Look, I know you hate the fact that the US spends so much on defense. You probably blame that for the country not having universal healthcare. But these issues are completely unrelated. Defense spending when measured as a proportion of GDP is currently very low by historical (and even global) standards. And though you may blame the “Military Industrial Complex” for the War in Iraq, be glad that the Iraq War only led to the death of 4418 Americans, a number that is around 2% of Russian deaths in Ukraine. The future is not all ponies and hugs. And if the US does not step up defense spending, then its casualties will eclipse those of Russia, China will take Taiwan, and you’ll learn how annoying it is no live in an unipolar world where somebody else is the unipole.

Note that you should not misinterpret this thread. Having a green flag is indicative of intelligence, while having a red flag is indicative of unintelligence. But do not assume the antecedent! Not having a red flag is not strong evidence for being smart and not having a green flag is not strong evidence for being stupid. For an obvious over-the-top example of this, an inability to calculate 3+7 is a surefire sign that someone isn’t smart, while an ability to answer with “10” is still not a sign of a clever individual. Likewise, someone with a math PhD from MIT is almost surely smart, but having said degree is not necessary for intelligence.

And if these feel familiar to you, it’s likely because I posted this as a thread to Twitter months ago.

Green Flags:

Green flag: using "percentage points" correctly (as opposed to "percent"). Common when discussing econ-y material. Quick example: a fall from 75% to 25% is both a 66% fall and a 50 percentage point fall.

Green flag: using the terms "probably", "more likely than not", "unlikely", "in most cases", "rarely".

Green flag: self-ironic and self-depreciating statements.

Green flag: shutting down arguments faster when realizing that the disagreement at hand is about a definition, and not necessarily very substantive. This requires a good amount of willpower when arguing, so is a pretty telltale sign of intellect.

Green flag: being high on decoupling. The ability to admit that evil people can be intelligent, or that good people can be dumb. Not falling prey to the "all good things are good together" or "all bad things are bad together" fallacies.

Green flag: the ability to repeat someone else's argument without strawmanning it.

Green flag: agreeing to bet on their beliefs. This is a sure sign that the person is not full of it.

Green flag: honesty about their own incentives in the conversation or argument.

Green flag: Not confusing intentions with actual effects (suggested by @PrivB4_).

Green flag: wanting to hear counterarguments (suggested by @jsperera1).

Green flag: qualifying their statements with scope conditions. E.g. “when X, Z, B, then Y holds”. Or at least a good ol’ fashioned “ceteris paribus” (suggested by @jsperera1).

Green flag: finding the crux of the argument. Instead of going in circles, trying to figure out what in particular could change the other person’s mind.

Green flag: looking for base rates. Instead of thinking that their child is at risk because of a recent school shooting, asking themselves how likely a shooting is in general.

Green flag: remembering the existence of opportunity cost.

Green flag: telling you how their probability of an event has changed after new information. In other words, Bayesian updating.

Red Flags:

Red flag: saying that you're "just stating the facts". Facts mean nothing without a narrative, those making this claim are never "just stating the facts”.

Red flag: asking questions about people's behavior in an accusatory tone. Often with the implication that the person in question is stupid ("why would he ever leave that job?"). Smart people will try to *explain* decisions with someone's beliefs/logic.

Red flag: using the terms "always", "never", "no chance", "definitely". Only a Sith deals in absolutes.

Red flag: refusal to engage in hypotheticals. Hypotheticals are often useful (and necessary) to test the logic of people's arguments. Running away from them is a good sign that someone is full of it.

Red flag: not appreciating first approximations, dismissing arguments or evidence because "you can't know for sure".

Red flag: verbosity. If you notice that someone is unable to summarize their key point in a few sentences, then that's a bad sign.

Red flag: arguing against a point by saying that it's "just theory". Theory is important for understanding the logical consistency of different positions.

Red flag: demanding you prove something with certainty before they buy into it.

Red flag: messing up levels vs rates (thinking "inflation fell" means "prices fell").

Red flag: assuming the antecedent. Thinking that *not having* a green flag from this list is a red flag. Or thinking that *not having* a red flag is a green flag.

Red flag: "if he's so smart why can't he...". Intelligence does not mean omnipotence.

Red flag: latching onto a tangential part of the conversation that they have better insight on. E.g. in a conversation about whether printing money causes inflation, they go on a long rant about measuring inflation because they worked at the BLS and have expertise there.

Red flag: presenting anecdotal evidence as a counter to statistical aggregates (suggested by @jsperera1).

Red flag: forcing spectrums into dichotomies (suggested by @jsperera1).

Red flag: thinking cynicism implies wisdom. The assumption that believing in the worst case scenario makes you “more real”.

Red flag: identifying with one’s beliefs. Taking counter-arguments as personal insults.

Red flag: zero-sum thinking. Assuming that one’s gain is always another’s loss. Radical political activists are often guilty of this.

Please suggest more below. I’m very welcome to the idea of making this an ever-expanding list.

Oh and I haven’t even mentioned the fun shenanigans involving Elon Musk in the first part of the year, but let’s not dwell on the past.

Chaos is clearly brewing inside the Republican party. But few know that this chaos has a name, and that name is Richard McKelvey.

A Primer on Social Choice Theory

Many of my readers may have heard of Arrow’s Impossibility Theorem. Colloquial accounts of the theorem state that “no ideal voting system exists”. A more academic definition would be that no voting system exists that guarantees (1) if everyone votes for you, you win (2) there’s no dictator (3) if A beats B and B beats C, A beats C (4) the choice between A and B depends on people’s relative preferences of those two, and not any other alternatives.

Since Arrow’s Theorem, economists and political scientists (henceforth “math-knowers”) have tried to work around it and develop conditions where a voting system can still work. Or at least sort of work. This is the field of social choice theory.

One equally well-known insight from this field is the median voter theorem. The statement is quite simple: if we can line up individuals in society on a one-dimensional left-right spectrum depending on their policy views, then there is one policy which would beat all other policies in a head-to-head matchup. That is, the preference of the median voter.

For a simple example, suppose five individuals have their own ideal tax rate, with the ideal tax rates being: 0%, 10%, 15%, 30%, 50%. If we had them vote between two alternatives at a time, 15% would never lose. If paired against 0% or 10%, then those whose ideal points are 30% and 50% would vote for it. And, vice versa if it is paired against 30% or 50%.

But, as noted above, the median voter theorem depends on a very special assumption: that we can line up individuals on a one-dimensional left-right spectrum. If this is impossible, then we’ll quickly find ourselves in trouble and back to Arrow land. To understand the implications of this, let’s return to the real world.

Diversity, yay! (Republican’s Version)

Chances are you’ve seen this image already. It maps political agreements in the United States. More specifically, it demonstrates that there is far more political agreement in the Democratic party than the Republican party.

Many have interpreted this as meaning that the right is more politically diverse. This is indeed true. The Republicans are an uneasy coalition of libertarians, Christian conservatives, populists, white nationalists, and the Tech Right. Meanwhile the Democrats pretty much all agree on the general direction in which they want to take the country. Their disagreements are more on the degree of left-wingness that they prefer.

Or to put it in social choice terms, the Democrats can be placed on a left-right spectrum pretty easily, while the Republicans cannot. In the Democratic party, individuals who are more left-wing on social issues such as abortion and LGBT rights are also more likely to be left-wing on economic policy. Think AOC. And those who are moderates on some issues are also more likely to be moderates everywhere. Think Joe Manchin (technically no longer a Democrat, but come on).

This is in large part why the Democrats, despite being self-hating and depressive, are able to not murder one another, while Republicans have resorted to name-calling. The Democrats, having preferences that can be mapped on a one-dimensional axis, are well-described by the median voter theorem. The Republicans, in contrast, are a better fit for McKelvey’s Chaos Theorem.

So…Who’s McKelvey?

Imagine the standard two-dimensional political compass. Put social issues on the vertical axis and economic issues on the horizontal axis. Let’s take three prominent Republicans and try to place them: Rand Paul, Susan Collins, Marco Rubio.

Rand Paul, being a libertarian, is the most socially liberal and economically right-wing. Rubio, being a standard conservative is somewhat less right-wing economically and more socially conservative. Meanwhile Collins is moderate on both issues. What do our political positions look like?

Something like this. Now ask yourself: if the above three were to vote on a combination of social and economic policy by pointing to a spot on this 2D plane, what point would be chosen?

One intuitive answer is that they might pick the center of the triangle formed by their three points (which I’ve graphed above to save us time). This intuitive answer is quite elegant and completely wrong. Suppose Rubio, being the nicest of the bunch, offers up the center of the triangle as a compromise option. Rand Paul could instead offer the midpoint between his and Collins’ ideal position. Since both he and Collins would prefer that, it would beat the center of the triangle. Rubio could then counter by offering Collins a point in-between their ideal positions, but somewhat favoring Collins so that she switches and beats Rand Paul’s offer. Rand Paul might then decide to make a #guysteam with Rubio and just offer Rubio their midpoint. Rinse repeat. This game has no equilibrium, there is no “core”. There is no policy that won’t lose to some other policy. Instead, it’s just chaos. That is what McKelvey’s theorem shows us. If you’re unable to map policy onto a singular dimension, then you’re in deep trouble.

(And, in fact, McKelvey showed that a point *outside* the triangle could beat points inside the triangle, which is where the real headache begins).

What Does the Future Hold?

Republican woes are only just beginning. Going back to Arrow’s Theorem, Republicans’ one defense from complete chaos is that they have a dictator. Trump acts as a mean bully that punishes all who get out of line. But the dictator’s days are numbered. He will either continue to lose popularity with mounting scandals and economic disappointment, or eventually just lose control after the 2028 election.

Their current hope is that JD Vance and Marco Rubio will run on a “unity ticket” in 2028. But even then, how welcome will this combination be? Nick Fuentes, a growing figure on the right, constantly attacks Vance as something of a race-traitor. Shapiro, the antipode of Fuentes in the current Republican party, is instead at unease due to Vance’s quasi-isolationist foreign policy views.

Will a hypothetical 2028 Vance commit to defending Israel? How will Carlsen, Owens, Fuentes, and the “new” Republican media giants react to this? If not, should he hope for the endorsement of the WSJ, Fox News, and traditional Conservative media? Either way, it’s difficult to imagine the future of this party without a dramatic showdown where the gloves fully come off.

So, again: chaos.

This post is meant to distinguish “cancel culture liberals” from the other varieties of standard center-left social thought. I want to explain that cancel culture’s political alignment is something of a paradox when one considers the political issues across the left-right spectrum.

Congress shall make no law…

In the first Trump era, the standard cycle of a cancel culture debate took the following form: (1) a famous person, oftentimes from Hollywood, would say or do something that is against societal norms or borderline illegal. (2) Most people on large social media sites (usually left of center liberals) such as Twitter and Reddit disavow said individual. (3) The companies employing these people would fire them. (4) Conservatives would strike back explaining that this is in violation of free speech principles. (5) Liberals would riposte by arguing that the first amendment only regulates the behavior of government and that social media websites, being private companies, can police speech as much as they like. (6) Conservatives add on that prosecuting people for mistakes they made years ago is punitive.

This cycle makes extremely little sense. The debate around free speech and litigation of past mistakes has traditionally had the precise opposite political split. Indeed, it has been the left that has argued for (1) regulating speech (2) creating bounds for how much discretion social media companies have in moderating their own content (3) forgiving people for past mistakes, sometimes with “right to be forgotten laws” which limit public information of past criminal behavior.

Likewise, it has been conservatives who argue that (1) the government has zero role in regulating speech, this function should instead be fulfilled by society (2) social media firms, being private entities, should make whatever moderation decisions they like (3) past wrongdoing should not be forgotten and people should be judged harshly.

So how can these positions on free speech and redemption of wrong-doers be reconciled with positions on cancel culture? If the right shall argue that the government should refrain from regulating speech (a view that I share), then what other than cancel culture can guarantee that society is able to deter the proliferation of legal-but-indefensible speech? In other words, if an individual is to face zero consequences (legal or extralegal) for making paedophile jokes publicly, then how do you prevent the spread of this behavior in society?

In the same vein, though I do not mean to paraphrase the often-canceled Larry Summers, how does the left simultaneously justify an interest in prison abolition since “hurt people hurt people”, and yet argue that James Gunn’s tweets from 2009 disqualify him in 2018? This would be quite easy to justify from a more conservative viewpoint, where Gunn’s tweets expose him as a terrible person incapable of changing, but how does the left make peace with this contradiction? Either everyone is capable of rehabilitation and can be made a better person, or some are beyond redemption. Pick one.

The Boogeyman Strikes Back

Naturally, society has ignored these apparent contradictions for a decade. The left cheered Twitter banning Trump, while conservatives screamed bloody murder. Eventually, “wokism” replaced “cancel culture” in the discourse and people’s attention shifted.

That was, until we underwent a “vibe shift” under Trump 2.0 and the government began to use its regulatory tools to crack down on undesirable media personalities. This was in unison with a variety of Trump and Pam Bondi statements essentially rejecting the first amendment. In a way, the Trump administration has shifted to a consistent position. One where society and the private sector has no say in the moderation of speech. Instead, the government (in this case through the FTC and the attorney general) prosecutes individuals for undesirable views. In other words, good ol’ fashion censorship.

This, of course, had wildly negative consequences. As conservatives killed cancel culture, they also stopped all accountability for hateful opinions. We have entered an era where twenty-somethings can talk about loving Hitler and maintain leading positions in Republican organizations. How did we get here? It’s because they’re on the government’s team! This has to do with the recent right-wing shift to Schmittian thought and the idea that politics is just one big Friend-Enemy distinction where you have to support your team no matter what, but that’s a post for another time.

As conservatives began to enjoy their newfound dominance, something funny happened. Tucker Carlson, who since being fired by Fox had become a buddy to wannabe Nazis and demon-fighters, invited Nick Fuentes after his podcast and did not challenge him in the slightest. Fuentes, who had repeatedly made fun of Tucker, described Candace Owens in…unflattering ways, and made a variety of antisemitic comments, was given a free pass by Tucker. The same Tucker Carlson who, on his show, once accused Sam Altman of murder in his face.

As Shapiro and other pro-Israel Republicans flocked to denounce Tucker’s behavior, they found that their attacks on Tucker were being construed as “cancel culture”. Kevin Roberts, head of the Heritage Foundation, flocked to defend Tucker. The Fuentes-tribe struck back using the right’s own methods from a few years ago and won a decisive victory.

So, what now?

Bring it Back

Cancel culture is dead for now. Tucker is allowed to invite Fuentes, Fuentes is allowed to blame the world’s faults on “Jews”, the President is allowed to lie about literally everything everyday, and even Democrats can sometimes rock Nazi tattoos without suffering consequences. This is wrong.

It is completely correct to cancel people for their actions, beliefs, or words. If someone reveals themselves to be a complete idiot, then it’s OK to fire them. If someone makes women uncomfortable at work through their words, it’s OK to fire them. If someone supports inflation targeting, cast them away from society. It is also OK to forgive these people if they express remorse and you are more or less convinced that they’ve switched to Scott Sumner-thought.

Otherwise you will have two options. (1) have the government take over the moderation of people’s beliefs, values and speech. (2) allow everything with zero consequences, essentially rejecting cultural norms.

The second may be entertaining, but cannot form the basis of a properly functioning society. You can have fun reading 4chan, but no one wants to have it be their life. The first is a very large step down the Road to Serfdom. A country where governments dictate speech and society takes their decisions as given, not protesting in fear of supporting “cancel culture” is not a country worth living in.

So if you support free speech, begin canceling people. Or watch as your rights wither away.

What naturally followed was an onslaught of individuals asking (1) is this adjusted for inflation? (it is, it says so on the graph) (2) is this accounting for social security benefits (it is, it says so on the graph) (3) is this accounting for different tax rates? (it is, it says so on the graph) (4) is this considering the rise in housing prices? (it is, shelter is 1/3 of the price index). (5) isn’t the data skewed by billionaires? (it’s not, it uses median data, and says so on the graph).

I’m still responding to the repeating flow of questions, but wanted to connect this to a general point about the political climate in the country.

Liberalism has succeeded. By all metrics, the world is a much safer, richer, healthier, and more prosperous place than it was a hundred years ago. Nevertheless, people continue to pretend that the world is terrible and that their parents had it much better.

Part of this is because old people tend to trip us up. They do actually believe things were better 50 years ago *because they were young 50 years ago*. And, in general, people tend to forget the unfortunate perils of youth in favor of the nostalgic bits.

But a more important factor than pensioner nostalgia-mongering is that humans take progress for granted. A clear example of this is the post-pandemic inflationary surge. Real incomes still rose! But that’s not how people perceive the world. People perceive wage increases as something they earned, while price increases are caused by “a broken system”. Of course, if one takes a look at Argentina, the picture changes quite quickly. People there have a better understanding of how inflation relates to wages, mostly because they have lived through many bouts of double-digit price increases.

In other words, our monetary system (and liberalism) is suffering from its own success. Americans forgot what inflation was like, and ended up with a framework of understanding that boiled down to “blame Biden”. Now, naturally, the heat is on Trump (who is, to be fair, somewhat responsible given his tariff policy).

It is also no coincidence that liberalism’s success has led to the rise of the far-left and far-right. Bernie Sanders, Curtis Yarvin, AOC, and Nick Fuentes are all products of a system where constant economic growth and political freedoms are considered to be the norm. This is why Bernie can promise wealth taxes higher than any developed country has had. It is also why Trump can play around with disobeying supreme court orders. The bulk of society simply does not believe that things can go wrong. Economic collapse from bad policy? The worst people can imagine is Covid or 2008. Dismantling of political freedoms? As far as the median voter is concerned, the worst case scenario is that some immigrants get wrongfully deported.

This is the world we live in, one where people assume that security and prosperity are guaranteed and unrelated to our liberal democratic system. As a result, a bulk of the country is convinced that the ills associated with liberalism can be solved by a radical upheaval. A switch to socialism, deporting immigrants, or crowning Trump king could solve our problems. And since “nothing ever happens”, our political freedoms and economic prosperity are under no threat.

In fact, none of this is new. Most of what I’ve said above is just paraphrasing Hayek from 80 years ago. Unfortunately for us, the last time the world witnessed these trends it resulted in the creation of the USSR and Nazi Germany. Let’s hope we stop taking liberalism for granted before we get to that stage.

But while the progress towards what is commonly called “positive” action was necessarily slow, and while for the immediate improvement liberalism had to rely largely on the gradual increase of wealth which freedom brought about, it had constantly to fight proposals which threatened this progress. It came to be regarded as a “negative” creed because it could offer to particular individuals little more than a share in the common progress - a progress which came to be taken more and more for granted and was no longer recognised as the result of the policy of freedom. It might even be said that the very success of liberalism became the cause of its decline. Because of the success already achieved man became increasingly unwilling to tolerate the evils still with him which now appeared both unbearable and unnecessary.

Because of the growing impatience with the slow advance of liberal policy, the just irritation with those who used liberal phraseology in defence of anti-social privileges, and the boundless ambition seemingly justified by the material improvements already achieved, it came to pass that toward the turn of the century the belief in the basic tenets of liberalism was more and more relinquished. What had been achieved came to be regarded as a secure and imperishable possession, acquired once and for all. The eyes of the people became fixed on the new demands, the rapid satisfaction of which seemed to be barred by the adherence to the old principles. It became more and more widely accepted that further advance could not be expected along the old lines within the general framework which had made past progress possible, but only by a complete remodelling of society. It was no longer a question of adding to or improving the existing machinery, but of completely scrapping and replacing it. And as the hope of the new generation came to be centered on something completely new, interest in, and understanding of, the functioning of the existing society rapidly declined; and with the decline of the understanding of the way in which the free system worked our awareness of what depended on its existence also decreased.

• Hayek - The Road to Serfdom

Strangely enough, very little ink has been spilled on the issue of who has benefited and lost from this war. The conventional wisdom in the West appears to be that the US is spending too much money on the war and must shut it down. Likewise, many analysts seem to believe that Russia has been “winning” because it has gained territory.

I’m here to make you see the war in a completely different light. The post below will be ruthlessly pragmatic.

Losers: Russia

That’s right. Despite gaining control of a large chunk of the Donbass, creating a land bridge to Crimea and bombing Ukraine every night, Russia remains worse off than it was in 2022. Think about this logically from a pragmatic point of view: in what way has Russia benefited? Its economy is worse off than it would be had there been no war. Interest rates remain at 18% and trade has been cut off with most of the West. The country has also lost access to Swift.

Militarily Russia’s weakness should be obvious - a few months into the war it couldn’t prevent border clashes between two of its allies - Kyrgyzstan and Tajikistan. More than a year in, it watched Azerbaijan demolish what remained of the Nagorno-Karabakh Republic, significantly reducing Russia’s military leverage in the Southern Caucasus. Russia now has to contend with both Finland and Sweden in NATO and an Armenia that is slowly inching Westwards. Oh and it has sustained something close to a million casualties in total.

Make no mistake, this is not what Russia wanted. The hope was that Russia would take Kyiv in three days (something that even CIA analysts believed) and watch NATO collapse. Instead, they now find themselves forced to sell energy to India and China at a discount with no capability to use the Europeans to their advantage.

Losers: Ukraine

I hope you didn’t expect me to be naive about this. The fact that Russia is worse off than before does not mean that Ukraine has won. The facts of the conflict are straightforward here: (1) Ukraine has lost a significant chunk of its territory (2) roughly seven million refugees have left the country (3) hundreds of thousands of Ukrainians are dead (4) there is no end in sight for the war.

There is, of course, some hope here. There is some future where the war ends with security guarantees for Ukraine and EU membership. This would allow the country to, to quote Kotkin, “win the peace” and turn into a proper Western liberal democracy. But we are still far from that future.

Losers: Europe

Europe is worse off for two broad sets of reasons. One is related to the costs associated with the war. They have been financing Ukraine with the few arms they have and have had to stop trade with Russia. This has given their economies a hit, but the effect is ultimately small (you can note that the blip is superficial in EU GDP).

The more important issue for Europe is that the war has led to an American reassessment of obligations. If Hegseth is to be believed, the US is now considering eventually leaving the continent. Many of you may not realize this, but US presence in Europe was heavily requested by even Russia. This is because the US has played the role of a pacifier on the continent and prevented other countries from rearming. This in turn ensures that security competition does not return to the continent and that Germany or France does not go insane if either gets some crazies in power.

Winners: United States

Here we are. The US has not lost from this war, it has in fact gained a tremendous amount. Let’s start with the easy part (1) Finland and Sweden are now in NATO, which helps US power projection. (2) Europe is scared and starting to spend on its own defense, making it easier for the US to pivot to Asia.

But what about the huge war spending? Hasn’t the US spent tremendous sums on the war? No. First of all, most of the spending is inflated. The US usually sends outdated equipment to Ukraine and pretends the original sticker price is still representative of the value. Nevertheless, even if we take the official numbers seriously, the claimed aid to Ukraine totals around 200 billion. This is across a 3.5 year period, giving us a yearly cost less than 60 billion. That is around 0.2% of US GDP per year.

Let’s put that into perspective: the US military plans to spend almost a trillion dollars on defense in 2026. So around 6% of US military spending is going to Ukraine and incapacitating the country’s primary geopolitical rival after China. That is obviously a good deal.

The counter-argument here may be that the US should not seek to weaken Russia because Russia would prove a valuable ally against China (this is sometimes referred to as the “reverse-Kissinger” argument). Though popular, this position is naive. Russia will not abandon its alliance with China regardless of how hard Trump (or any other President) tries. The fact of the matter is that the US is a democracy. And Russia will remain afraid that US policy could change in the blink of an eye after elections pass. Therefore, any hope of splitting up Russia and China should be abandoned. And when one abandons such hopes, the optimal policy prescription becomes obvious: spend 0.2% of GDP per year to hamper your second largest rival.

Winners: Post-Soviet States

Natural winners from the war have included post-Soviet states that have their own ambitions that conflict with Russian interests. Russia being bogged down in Ukraine has led Azerbaijan to reclaim Nagorno-Karabakh and Armenia to establish a strategic partnership with the US.

Even states with no grand ambitions have benefited. First of all, they have spent over three years sleeping easy because Russia has had no wherewithal to invade them (I can attest that my REM sleep has improved since 2022). In addition, post-Soviet states have served as conduits for sanctions evasion, allowing them to take part in the profits. Honestly, it’s fun to border Russia if they can’t invade and instead pay you royalties for trade.

Unclear: China

This is the big one and I’m afraid I have no obvious answer (and in fact, I would appreciate your own takes in the comments). China has benefited from the war because Russia is now fully dependent on it. With nowhere left to run, the Chinese are able to buy Russian energy at a discount and help dictate policy. On the other hand, the war has resulted in their primary geopolitical ally becoming much weaker. As a result, it’s quite unclear whether China is better or worse off than it would have been without a war in 2022.

But these conspiracy theories are plain tame compared to what we see out there sometimes. No, I’m not here to talk about conspiracy theories about planned obsolescence or Macron’s wife being a man.

Rather, I want to face off against the final boss of conspiracy theories: that there is a secret group or cabal out there ruling the world and pulling the strings. They cause wars, they design our TV programmes, and they try to stop us from drinking raw milk.

These conspiracy theories have dozens of variations. Some are related to lizard people, while others focus on everyone being a secret Jew. But they all circle back to a group that has achieved world domination.

I’m here to humor the conspiracists. Let’s discuss what the world would like if they were right.

Macroeconomics of World Domination

1. If the world were ruled by a cabal, there would be no war. Ever. After all, war is wasteful. Homes are destroyed, resources are lost, people are killed. The secret cabal would much rather enslave those people or steal those homes. Why have war? Some will argue that it’s to help enrich the owners of Lockheed Martin or other military manufacturers, but this misses the point. If you control the world, you can just give those firms money in peacetime. Why bother losing resources through war? It’s a waste.

2. If the world were ruled by a cabal, we would have free trade everywhere. Free trade helps production! Sure, sometimes some people might be worse off from trade, but the secret cabal doesn’t care about that. They just want to have as much production of resources so that they can get as rich as possible. Therefore, a secret cabal would abolish all tariffs, quotas, and other forms of protectionism.

3. If the world were ruled by a cabal, there would be no unions. After all, they make suppress production.

4. If the world were ruled by a cabal, there would be no fertility crisis. Labor is necessary for production, so why allow people to have less babies?

5. If the world were ruled by a cabal, there would be a lot fewer humanities majors. They don’t really help grow GDP.

6. If the world were ruled by a cabal, there would be no NIMBYs. NIMBYs make building more difficult, the cabal would never allow them.

7. If the world were ruled by a cabal, there would be no capital gains taxes. Capital gains taxes disincentivize investment and economic growth.

8. If the world were run by a cabal, there would be no immigration restrictions. With free migration, labor moves from less productive to more productive locations. This would maximize growth.

9. If the world were run by a cabal, we would tax carbon. After all, the cabal would want to minimize the odds of a climate catastrophe.

10. If the world were run by a cabal, we’d have more nuclear energy, more solar energy, and in general a lot more cheap renewable electricity.

11. If the world were run by a cabal, AI would be tightly regulated. The cabal is not going to risk AGI taking over.

12. If the world were run by a cabal, the tax rate would be set very carefully to maximize expected revenues for the cabal over time.

13. If the world were run by a cabal, we would have nominal GDP targeting.

Conclusion

Really, the point here is that a cabal would run the world like efficient authoritarians run their countries. The world would look more like the inside of China and less like…this.

Or to put it bluntly, we do not have nominal GDP targeting, therefore the world is not ruled by a cabal.

I

Every morning I see headlines from both the United States and from Georgia and I realize just how bad things could get. Not only do I feel personally affected, but I feel academically affected - I’m getting a doctorate in political science. But somehow only a very small fraction of my life is spent on actually fighting back in the political realm. This seems contradictory.

Read more

Economists, in turn, usually have a simple retort. Physicists don’t read Newton. Newton’s correct ideas have been restated and optimized for textbooks. Physicists just learn Newton’s Laws directly and need not concern themselves with biblical views.

The critics then counter that economics is merely a social science and that it needs to stop comparing itself to physics. That it’s not clear whether Marx was right or wrong (sigh) and that economists are simply closed-minded.

I’m here to argue that the critics may have a point, but not the one they think they have.

Why you Shouldn’t Read Marx

First things first, don’t read Marx. Unless your goal is to study the history of economic thought or figure out what Marx really meant, he’s simply not worth reading. The issue with Marx isn’t that he was a socialist, that was fairly common even amongst intelligent people in the 19th century. The issue with Marx is that he was a stupid wordcel who made a hobby out of contradicting himself every other sentence. Sometimes his Labor Theory of Value is a theory of the equilibrium price in an economy, sometimes it requires a coefficient to transform them into prices, and sometimes competition just gives us monopolies so the LToV makes no sense anyway.

In short, there’s little to no value in reading the man. I personally am glad I read Marx, but that’s because I wanted to actually know what he was on about. After recognizing it for the drivel it was, I stopped caring. This also applies to the Communist Manifesto, which is an useful text if you want to know what the Communist Manifesto says. But if your goal is to improve as a social scientist, it will do nothing to help (despite what Twitter claims).

Now then, onto the question of why you should read the classics. And by “classics” I mean the likes of Smith, Irving Fisher, Friedman, and Ken Arrow.

Understanding Paradigms

To understand my argument, we first need the simple concept of Kuhn-Loss for which we must in turn understand Kuhn. Thomas Kuhn was a physicist-turned-philosopher who argued that science often goes through paradigms. Ways of doing science that conform to certain norms and rules. These paradigms have tools which they use to solve puzzles and advance how their models fit the world. A clear example of this is the discovery of Neptune. Scientists noticed that something was off in their model of the solar system, Newton’s equations were not working as they should have. But instead of discarding Newtonian mechanics because it failed to explain the world, they conjectured that they had missed a planet somewhere. And they really had, that’s how we discovered Neptune.

And the paradigm of Newtonian Mechanics held for a pretty long time. At least until it came upon what we refer to as an anomaly. Something that it could not explain and presented a problem for the fundamental ideas of the theory. In this case, it was Mercury’s orbit. To solve this anomaly, Albert Einstein had to come in and completely break open the paradigm, replacing Newtonian Mechanics with something completely new in the form of General Relativity.

But when paradigms are smashed because of anomalies, we often lose significant chunks of knowledge that no longer stand up to scrutiny. This has happened countless times in macroeconomics.

In 1929, the Great Depression ensued. Classical economics could not explain what was going on, an economic downturn should not have taken this shape of a falling price level coupled with falling output. To solve this anomaly, the world made a switch to Keynesian Economics, where we considered aggregate demand to drive the economy (well, at least in the short-run) and believed in the Phillips Curve - the idea that there was a persistent trade-off between inflation and unemployment.

As we made this switch, countless old knowledge was put aside. Economists forgot about Ricardian Equivalence, a 19th century idea which posited that deficits would just result in the public adjusting its own spending patterns. We forgot about the importance of the money supply for the price level that even David Hume understood and kept committing fallacies that now appear utterly silly,

As the Keynesian paradigm continued to dominate, Friedman conjectured that the Phillips Curve would collapse, and it did. Keynesians went into crisis-mode because the US suffered stagflation - rising inflation coupled with a high unemployment rate. As the crisis deepened, Keynesian views faced their own anomaly and the line of thinking receded. There was a resurgence of monetarism as Friedman argued that the money supply was central to explaining the Great Depression, and Ricardian Equivalence returned with a vengeance after it was redone by Robert Barro.

And then the cycle repeated again. Many embraced a new way of studying economics which completely dismissed the relevance of aggregate demand and built everything from rigorous microeconomic principles. Keynesians were at this point unable to meet the new rigorous standards so business cycles were now considered to be purely driven by real factors. This ensued until the New Keynesians came along and managed to “bring back” Keynesian ideas just as Barro had brought back Ricardian Equivalence. They had their moment to shine when other macroeconomists found themselves unable to explain the “anomaly” of the Great Recession.

Kuhn-Loss, Again

The lesson from all of this, is to never underestimate the power of Kuhn-loss. As science switches paradigms, knowledge is lost. Our standards change and previous concepts thought to be obvious become obsolete. This is especially important in the social sciences that have taken great steps towards mathematization. Previous works now usually fall flat due to two factors (1) they do not meet the standard of rigorous mathematical formalization (2) they do not meet the empirical standards of the Credibility Revolution.

This presents an amazing opportunity to any young researcher. Pop open a copy of Fisher’s Money Illusion. You will find that by modern criteria, practically all of his claims are unsubstantiated. You will also find that he has a million interesting hypotheses. You can take any of them and run with it. Write down a model, estimate the parameters. Use the tools of our existing paradigm to bring old ideas back to life.

And this applies pretty broadly for those seeking to do rigorous social science work. I cannot count how many times I’ve heard a Professor mention that they came across their own “novel ideas” as a passing mention in one of Kenneth Arrow’s works. The great thinkers of the past are great for a reason. They survived the test of time and have been filtered out - this gives you pretty good grounds to assume that they’re smart people. And smart people have interesting ideas to contribute, even if they aren’t well-substantiated!

Again, this is everywhere. Are you studying growth? Read Solow and even Adam Smith. Are you studying monetary economics? Fisher, Friedman, Samuelson, maybe Hayek. Anything related to Micro? Ken Arrow. Game Theory? Obviously read Myerson, but maybe even take a look at Neumann. Are you a political scientist? Make sure to read Tilly. And if you study international relations like I do, make sure you get your fair share of Mearsheimer takes to start the morning and make you angry.

P.S. maybe start with this Krugman post which is an older (and perhaps better) version of what I wrote here?

By now we’ve gone through several rounds of the Trump tariff craze. We’ve seen the markets drop and rise like rollercoasters, but many have missed some interesting nuances of what has transpired.

First of all, a brief glance at markets gives us a curious picture of what occurred. As Trump began speaking and argued for “reciprocal” tariffs, the stock market had a slight increase. This is because markets had already priced in the possibility of something like 10% across-the-board tariffs. That’s what they were already expecting. Reciprocal tariffs would actually be a much more pro-free-trade system when compared to a flat 10% rate, so the markets began to rise. It was only when Trump announced his understanding of reciprocality that markets crashed.

In other words, expectations matter. If markets expect you to behave like a dumb-dumb and you do something that’s only mildly stupid, then stock prices will increase. Likewise, if they think of you as a tech genius and you demonstrate that you don’t understand SQL, they will fall.

This is true for a wide variety of economic variables. Will inflation fall (relative to the counterfactual) if the Fed increases interest rates? Depends on what the market expected the Fed to do to begin with! Will inflation raise unemployment as the Phillips Curve teaches us? Only if the inflation was unexpected.

After you begin indexing to expectations, things never really look quite the same.

Causation Does not Imply Correlation

I’m sure you understand that correlation does not imply causation, but do you understand that causation does not imply correlation? One variable could be causing another, but you may never find it in the data!

Here’s a simple example: imagine yourself driving on a road with a speed limit of 60mph. Suppose further that you’re in a bit of a rush and are quite a good driver, so you’ll make sure to maintain 60mph constantly. What happens if you come across an uphill portion in the road? You’ll step on the gas to maintain 60mph. And what will happen if you find the car going downhill? You’ll take your foot off the gas and might even apply the brakes to stop yourself from violating the speed limit.

Now imagine if a rogue statistician were to stumble upon a dataset showing when you pressed the gas pedal and the velocity of your vehicle. He would discover that as gas usage varied, velocity remained constant. There was no correlation. The statistician concludes that neither gas nor brake pedals affect speed. The next time he sits down to drive a car, he dies.

The morale of the story is that causation may sometimes exist without a single hint of it in the data. In fact, causation may cause no correlation. A fun macroeconomics factoid is that though the money supply has a very strong correlation with inflation over longer timeframes in different countries, there is little to no correlation in countries that adopt inflation targeting.

It makes sense if you think about it. There’s different shocks to the macroeconomy. Central banks adjust monetary policy to make sure they hit their 2% inflation target. This leads to variation in the money supply, but no variation in inflation. Thus, we are left with causation and no correlation.

Income vs Substitution Effects

People often get into arguments when a certain change induces two different effects that push in opposite directions. A common example in economics is when the price of a good changes. Will an increase in the price of water increase or decrease the demand for iced tea? On the one hand, people may start substituting iced tea for water, leading to an increase. On the other hand, when they buy bottled water, they’ll be spending more money and have less left over for iced tea, leading to a decrease in demand. The final change in demand is unclear.

This former phenomenon is known as a “substitution” effect, while the latter is often referred to as an “income” or “wealth” effect. They are difficult to unsee after you’ve spotted them once. Will an increase in wages decrease or increase the amount of time people spend working? Well, they’ll earn more money per hour now, so that should lead them to work more. But they can also make the same amount by working less time now, which will induce them to work less. The exact effect is, again, unclear.

And as we get past the point of pure intellectual curiosity, income and substitution effects have massive implications for policy. Would raising the earned income tax credit be a pro-work or anti-work policy? Could taxes actually induce people to work more by making them poorer? Tough luck, you’ll have to dive into a trove of messed up econ papers to find out the answer. Though my general advice would be to assume that substitution effects dominate.

Are Savings Good or Bad for the Economy

When it comes to economic growth, people have two stories in their heads.

One says that savings is bad for the economy. If you save all your money, then you’re not giving it to firms. If you’re not giving it to firms, they can’t pay it out to workers. If they can’t pay it out, they fire workers. Those fired workers then have no money to spend. The cycle continues and you get a Great Depression. That is the strawman version of Keynesianism many appear to believe (it’s akin to characterizing Marxism as “time was invented by clock companies to sell more clocks”).

The second story says that society’s wealth comes from production. Production broadly depends on capital, labor, and technology. Savings affects the level of capital. When you save money, you are in some direct or indirect way investing in capital. Your bank loans out your money to businesses, or you buy stocks directly. Either way, you refusing to spend money on consumption today leads to the creation of more factories, tractors, or whatever form of capital your country makes the best use of. This in turn leads to economic growth as we use these tools to make more goods in the future.

So which story is right? Mostly the second one. Long-run economic growth is indeed related to savings. Savings also explains a large chunk of what we know as the “Asian growth miracles”. They show up in most economic growth models and truly do matter for long-run prosperity.

The first story is a fairly vulgar retelling of Keynesianism. It is true that under some specific circumstances spending drives economic growth. Indeed, if you were to spend as much as possible during the Great Depression, that would spur economic activity. But that is not true under normal conditions (or even the abnormal conditions of the highly uncertain Trump economy).

And though there are many explanations of why the first story is false, I’ll fall back on a monetarist perspective: spending can raise production, but it also raises prices. This will lead to the Fed raising interest rates to stop inflation. Therefore, spending will not result in higher growth, it will instead lead to higher interest rates which in turn induce savings. For spending to matter, the Fed must be trying to get inflation higher and failing. This was true in 2009, it is not true today. It is also why most “stimulus” bills will fail to be stimulative now that we have gone past the era of zero interest rates.

This is scary. For decades the conventional wisdom has been that young people tend to be liberal. They then grow more conservative as they age. Explanations of this phenomenon vary, with some believing that it relates to young people not paying taxes, them being more empathetic, or just college being a liberal vibe. Regardless, if we see a shift now, then the Democrats may be at a large disadvantage.

Naturally, many have flocked to blaming social media. Tiktok has enabled figures such as Andrew Tate to influence young men, the YouTube algorithm often locks people into a right-wing bubble, and Elon’s Twitter isn’t doing too much to help either.

But something else is also off. Not only have young people become more accepting of Trump, but those over the age of 60 have moved away from him. Trump’s worst net approval rating in a January poll by Emerson is in the 70+ category.

I offer you an alternative explanation: there has been no shift. Young people were never necessarily Democrats and old people were never necessarily Republicans. No. Young people tend to be rebellious and radical. They want to break apart the system and build it anew. They want large-scale changes on a short timeline. Old people on the other hand tend to be skeptical of change. This dichotomy has often been construed as “liberal” versus “conservative”, but it need not be so. Yes, it is true that older people’s political intuitions tend to be conservative, but this conservatism is defined by what it’s conserving. For the past few decades, people were “conserving” old rules regarding abortion, marriage, and divorce. Not anymore. Trump and Elon couldn't care less about whether Obergefell gets overturned. But this administration does represent a huge middle finger to existing American institutions. On January 6, Trump attempted to prevent the certification of the 2020 election. Today DOGE promises to upend the bureaucratic state. Those on the other side of the aisle have been fighting to preserve democracy and existing political institutions.

Think about it. Right now Trump symbolizes change. Our side symbolizes an attempt to prevent these massive changes and save the existing set of political procedures in the United States. Trump is driving history. You and I, dear reader, are, as Buckley would put it, “standing athwart history, yelling Stop, at a time when no one is inclined to do so”. It is only natural that the “conservative” old people have turned towards us, while the more “radical” youth has turned against us.

Support for liberalism has become conservative. We have become the conservatives.

Only Comparing Benefits or Costs

One common statement I heard during the pandemic went something like this: “we’ve shut down schools, but we have not shut down public transportation, how is this consistent?”. The person asking the question clearly implied that the risks of infection were just as great from public transportation, therefore, a policy regulating one should also regulate the other.

This reasoning falls flat as it only views one side of the costs vs benefits equation. Indeed, public transportation may have been a larger Covid-19 risk than schools, but schools can at least partially be replaced with online education tools such as Zoom. No such option is available to replace buses and subways. In other words, the person asking the question only compared the benefits of regulating schools and transportation, but not the costs.

After hearing about this once, you’ll notice it everywhere. Another clear example here is the often-mistaken belief that if the United States or some other country did not do something, they were not capable of doing it. In reality, it could simply have been that it was not worth the costs. In fact, I assure you, that if the US thought “winning” in Afghanistan was dreadfully important, they would have sent in two hundred thousand soldiers and stayed for another 20 years.

Ex Ante vs Ex Post

Suppose you observe someone execute a risky political maneuver. Say, an US President incited a mob to overthrow the results of an election. Say that people said this was a huge mistake and would end his political career. Say that he then went on to win the next presidential election regardless. Purely hypothetical of course. Many would rush to crown this hypothetical President as a political genius. He takes bold risks and they pay off.

But this betrays a fundamental confusion between ex ante payoffs and ex post payoffs. Your action may have turned out fine, but that does not mean it was the right choice. The right way to think about this is as a terrible lottery that you just happen to win. You’re about to roll a pair of dice. If you get two sixes, you win five million dollars. If you don’t roll two sixes, you lose five million. You roll two sixes and live happily ever after. Was this the right decision? No, you’re just an utter idiot who got lucky.

This fallacy also appears everywhere if you look for it. If the Invasion of Ukraine ends on Putin’s terms, people will laud him as a strategic genius, even as the decision to begin the war was a completely stupid risk with extremely negative payoffs.

So do not judge leaders by their intentions and do not judge them by their results. Judge them by the expected results of their actions.

Constant vs Current PPP

This will be a very simple one.

Above you see two graphs of India’s GDP adjusted for purchasing power. Do you see a difference? The numbers seem to be somewhat off and the graph on the left appears to have a steeper slope.

This is because there are two ways to adjust for PPP. The graph on the left is called “current international $” while the one on the right is “constant 2021 international $”. The one on the left adjusts for differences in purchasing power between countries and is very apt for comparing the GDP of different countries at the same point in time but it does not adjust for the inflation of the dollar. The graph on the right on the other hand makes both of these adjustments and is the correct metric to use if you plan on tracking a country’s economic performance over time.

Sidenote: this is a mistake I’ve seen some extremely seasoned economic commentators make. So beware that it will be quite common in the wild!

Fisher Equation

The Fisher equation is one of the most important equations of macroeconomics. It states that the real interest rate is the nominal rate net of inflation.

Unfortunately, it has been greatly misinterpreted. One common mistake regarding the Fisher equation is to think of the real interest rate as fixed and as something that central banks cannot affect. When one reasons like this, they conclude that inflation can be lowered if nominal interest rates are lowered. This has led to the disaster that is the Turkish economy.

The reality is much stranger. Central banks raise interest rates and thereby lower inflation. But if they want a higher long-run nominal rate, they’ll have to raise inflation to make that happen. Does that make no sense to you? Good, then you can read my piece on monetary policy.

Make sure you catch part two which will include: (1) the importance of expectations (2) that even causation does not imply correlation (3) the importance of income and substitution effects (4) whether savings are good or bad for the economy.

As the Trump administration has begun its foreign policy adventures, it is becoming increasingly clear that they are making the classic fallacy of mistaking a nation-state for a company or a business. You can see this in their approach to both Ukraine and the Israel-Palestine conflict. Trump believes that the United States “owning” Gaza will be beneficial. After all, a company benefits from obtaining assets for free. Furthermore, they view the money spent in Ukraine as a financial investment that must be recouped through, say, Ukrainian rare Earth minerals.

This view makes perfect sense if you see the United States as a firm seeking to maximize profits. It makes no sense if you understand that nation-states are not companies and operate under radically different constraints. Below I will try to explain this distinction and its relevance to the issues facing us today.

Anarchy, Anarchy, Anarchy

The first thing international relations students learn is that states exist under anarchy. This does not refer to constant pillaging of grocery stores and lawlessness, but rather that there is no higher authority that countries can appeal to. As a famous Realist likes to say, if a state attempts to call 911 to protect their rights, it will discover that there is no one ready to take the call.

When you realize the importance of anarchy in geopolitics, quite a few things begin to make sense. First of all, it should become obvious to you that states face massive commitment problems. Ukraine and Russia could make a deal where Russia promises to not attack if Ukraine puts its NATO ambitions on hold, but there is no way to guarantee that either side will uphold its end of the bargain. Russia could rearm and launch another offensive, or Ukraine could wait for a window of opportunity where Russia is weaker and try to join NATO.

And after the brutal consequences of anarchy dawn on you, it should become clear that assets are not mere assets. The United States can’t just hold onto Gaza like a piece of land. It will require military forces to maintain. It risks border conflicts with neighboring countries such as Egypt. It risks putting US troops in harm’s way if Hamas reorganizes and decides to strike. Simply put, land can become as much of a liability as an asset.

Anarchy also means that states become forced to think about relative gains. In our day-to-day lives we view war as obviously harmful. It leads to the deaths of thousands, the destruction of property, and massive trauma. If only states could have avoided the war through diplomacy we would all be better off. This would be the behavior of firms in a market. They would strike a deal that would be enforced by courts. But since states are unable to do so because of commitment problems (again, Russia can’t promise not to attack in the future and Ukraine cannot promise to not join NATO), war becomes inevitable. Then your goal becomes to lose less than the other side.

This implies that certain states may view destructive wars as beneficial. Indeed, if Americans were cynical enough then they might see Russia’s invasion as a triumph of US foreign policy. A major geopolitical opponent began a war which led to it losing hundreds of thousands of soldiers. The cost to the United States was just around 0.1% of GDP per year. If American leaders thought this option possible during the Cold War, they would have been ecstatic. When viewed this way, American assistance to Ukraine has paid off a hundred fold and might be a rare instance of what our aforementioned Realist called “bait and bleed”.

Alienating Allies

Because of the issues mentioned above, allies become essential in international politics. You cannot really ever trust other states since they are always incentivized to renege on deals. But you can try and build reputation through decades of mutual cooperation. This is what the United States has done with its NATO allies.

But what if you just don’t like your allies anymore? Could the United States decide to make a “grand deal” with Russia and align with Putin against China? This is the “reverse Kissinger move” that some believe the Trump administration is attempting to pull off. Stranger things have happened in the past. In 1756, the European powers reshuffled their alliances and the continent changed radically. In 1945, the US and the USSR went from allies to enemies, whereas Japan and the US went from enemies to allies. Changes in the world do often lead to instantaneous changes in alliances. But is that possible today?

Most likely not. Though the Trump administration may be interested in a grand realignment, it is impossible to commit to such a realignment. Russia might view an alliance with the US against China as ideal, but they have spent decades on the opposite approach. In fact, they do not trust the US. Sure, Trump might promise to play nice, but he made similar promises in his first term, only to eventually give Ukraine lethal arms. Furthermore, chances are that Trump’s successor will change US policy again. Russia cannot afford to let its existing alliances go down the dumpster and alienate China for the sake of an increasingly mercurial and unpredictable United States.

But of course, if these two were companies trying to maximize profit and had the power to take their matters to court, life would be much easier. Unfortunately, that is not the world we live in. The administration ignores this simple truth at their peril and is pursuing an impossible strategy.

Not Understanding Scale

The final mistake we see today is complete blindness to the scale of the United States versus firms. The biggest employer on the planet is Walmart with 2 million workers. That is hilariously small in comparison to the US labor force of 160 million people (not counting those who do work at home, of course). Similarly, Walmart’s 650 billion revenue is a joke compared to US GDP of 30 trillion dollars.

When you operate on this scale, the value of every dollar becomes drastically different. Even if the United States were to sign a punitive rare minerals deal with Ukraine and magically obtain $500 billion, that would be equivalent to a one-time end of year bonus of 1.6%. If stretched out over ten years, it’s a “raise” of 0.16%. This is not enough to make a dent in the US national debt of $36 Trillion.

On the other hand, this would be a massive loss for Ukraine. The country’s GDP is currently around $180 billion. Asking for $500 billion is equivalent to taxing Ukraine for all of its income for three consecutive years. As any good right-winger such as Trump should understand, a 100% tax will generate 0 revenue because of the Laffer Curve.1 In other words, it will crash the Ukrainian economy. This increases the probability of further Russian aggression in a few years and will lead the Ukrainians to detest the United States. Even if that does provide a one-time 1.6% end-of-year bonus, it is obviously a poor idea.

Conclusion

We are living through an administration that is making extremely basic mistakes about geopolitics. They see the world as an opportunity to make money as opposed to guaranteeing US security. Towards this end, they have chosen two financially poor targets to exploit in the form of Gaza and Ukraine. This is unlikely to be profitable and will only lead to the demonization of the US as an ally. If American policy does not change, in a few years you can expect renewed pro-Russian sentiments in Europe as many begin to claim that both the US and Russia are simply out to exploit the continent for their own gain. There is next to no benefit to the path we are on. We are being led by weak men. Pray that they do not create hard times.

1. There is no good solution to Israel-Palestine. US presence in Gaza is a terrible solution. Regardless of how much you (dis)like Israel, they are powerful enough to not require this level of American support. Sending troops to Gaza will just increase hate for the United States and bog the US down at a time when Taiwan and Ukraine require our full attention. Fortunately, markets think Trump is lying.

2. Trade deficits are not a problem. You are exchanging dollars for goods. You have a trade deficit with the supermarket, but that does not mean that you’re “subsidizing” them as Trump believes.

3. Tariffs almost always harm the economy. Sometimes they can be justified on national security grounds. Tariffs on close allies are foolish.

4. USAID spent money on lots of stupid goals. But you can look to who has rejoiced its pause to understand whether Musk’s behavior is beneficial to US interests.

5. There’s waste in the US government. The federal budget cannot be balanced by cutting waste. Balancing the budget will require cutting welfare. Trump is not prepared to cut welfare.

6. DOGE is unlikely to “dismantle the bureaucratic state”. Markets only expect <15 out of 441 agencies to be cut.

7. The Democrats need to get their shit together. If Elon can walk into a government building, then so can Democratic senators and congressmen. Projecting weakness is especially problematic when Trump is projecting this much strength.

8. Wokism has been crushed under the vibe shift. This has nothing to do with whether it was right or wrong. But it’s strategically unwise to focus on it now. Resistance to Trump will have to focus on tangible harm caused and not just insane Republican statements or physical gestures.

9. Trump is not mentally healthy. Most billionaires go insane. Most old people go insane. 78 year-old billionaires with zero self-reflection are all mentally unwell.

10. He has no grand plan. But people around him might.

11. Elon is extremely intelligent. He’s also insecure and prone to insane positions. In other words, he’s a stupid smart person. Stupid smart people with power are dangerous.

12. Tulsi Gabbard is an unqualified Russian asset and generally an all-around idiot.

13. RFK Jr. is an idiot.

14. The US could probably “buy” Greenland by giving each citizen $1,000,000. They opposite it now, but six zeros and six zeros. Invading Greenland is idiotic beyond measure. The US can achieve all of its military aims without controlling the island.

15. The War in Ukraine did not end in 24 hours. It cannot end yet as there is no peace treaty that both Ukraine and Russia can commit to. There is no path to peace that does not include US aid.

16. Immigration is good for the economy. Immigrants do not lower wages. They raise the supply of labor, but they also raise the demand for labor.

17. Trump will have the opportunity to appoint the next Fed Chair. If he picks someone insane like Judy Shelton, they could do great damage. Bad monetary policy caused both the Great Depression and the Great Financial Crisis. Macroeconomics is unforgiving.

18. The US is spending 3.7% of GDP on the military in the most tumultuous geopolitical period of the last 30 years. This is the lowest since at least WW2. That is bad.

19. Trump is much worse than mainstream Republicans such as Marco Rubio. But mainstream Republicans are no longer mainstream in the Republican party. Things could get even worse after he leaves. Imagine Tucker Carlsen as POTUS.

20. We have been cursed to live in interesting times. Things can always get worse, but it’s never over.

On March 5, 1953 Joseph Stalin made the second greatest humanitarian contribution of his life - he died.

After his death, the USSR went through a period of moderate liberalization under Khrushchev, who pursued a policy of “De-Stalinization”. During this period, the USSR became somewhat less abhorrent.

One can of course imagine an alternative history, where Stalin is born a few years later and comes into power younger. Perhaps his health suffers less and he lives until 1960 instead. The USSR could have been far worse for far longer.

II

In 1999, Russians were already preparing for the 2000 Presidential Elections. The top contender was Yevgeny Primakov. Primakov was a typical (successful) 70 year-old Soviet bureaucrat. He supported anti-Western policies and showed no signs of liberalization.

His main opponent was a younger man with a Doctorate in Economics who stressed the importance of transforming Russia into a more classical liberal society. He even wanted the country to join NATO.

After some internal conflict, Primakov eventually canceled his bid for the presidency and supported his rival, who you may now know as Vladimir Putin.

Soon enough, Putin destroyed all signs of democracy in Russia and started a personality cult.

One can of course imagine an alternative history, where Primakov becomes President in 2000 and does not establish a dictatorship. Simply because he’s too old to bother.

III

My primary argument here is that gerontocracy has a large upside - it reduces the odds of descending into (and remaining as) a dictatorship. This has two primary reasons:

(1) The gains to becoming a dictator are much smaller when you’re older. If you manage to become dictator at 50, then you can look forward to 30 years of your rule. Lovely. If you’re 75, then a 5-year period of absolute power is just “meh” in comparison. Old people are also generally more risk-averse and are less likely to want to risk going to prison. Again, lowering the odds that they will attempt to overthrow democracy.

(2) Personality cults often end when the dictator dies. Even if you do end up in a dictatorship, you would much rather have an old dictator than a young one. Stalin will soon die and make room for Khrushchev. But Putin is going to stay in power for a long, long time. If you are to have any hope of going back to a democracy, then you would much rather have an 80 year-old in charge, than a 60 year-old.

IV

Many Americans in 2024 (and 2020 for that matter) were upset that they had to choose between two extremely old candidates who would randomly start ranting about golf. But for those of you nervous about the odds of Trump attempting to run for a third term or pulling another January 6, this is a silver lining. He’s old. The man drinks a dozen diet cokes a day - he is not going to live to 100 like Jimmy Carter did. He is already showing signs of major cognitive decline and is unlikely to have the physical and mental ability to overthrow democracy in 4 years.

So be glad that your wannabe-authoritarian President is 78. Us Georgians are not so lucky, our guy is a full decade younger.

But Soros deserves every award he receives. He created the Open Society Foundations which helped end the USSR and fostered a large network of civil society organizations in former communist countries. He also founded Central European University, which has financed education for countless low-income individuals. Either of the above two achievements would be enough for a Presidential Medal of Freedom for any normal person. Alas, Soros is not normal.

So I’ve chosen to focus on neither of these two obvious accomplishments. Curious individuals can read OSF’s history or think about how hard it is to create a good university from scratch.

Instead, I will focus on Soros’ status as the Man Who Broke the Bank of England. Given that this is one of the most famous stories for why people hate Soros, I thought it fitting to explain the value of what he did.

(Note: the below is based on a video I made for my now-almost-certainly-failed YouTube Channel a year ago)

The common story goes as follows: the Bank of England had a fixed exchange rate to the Deutsche Mark. Soros started borrowing pounds and selling them at a huge rate. As a result, the Bank of England was unable to maintain the exchange rate peg and was forced to devalue, this then led to great suffering. Therefore, Soros is bad.

The story is mostly right up until the last sentence. The reality is that the Bank of England originally pegged the pound to be worth 2.95 Marks, with a lower bound of 2.77. This was far too high. To maintain the exchange rate peg the Bank of England generally resorted to two mechanisms: (1) forex interventions (2) altering interest rates.

The former is simple. If you have a reserve of USD or German Marks, you use them to buy up Pounds, increasing their value. This works fine as long as you have a reserve of foreign currency. Unfortunately central banks can only print domestic currency, therefore, it’s not exactly a viable long-term solution.

The other method you can use is changing interest rates. This is a blunt instrument that has great effects on the entire economy, but can definitely help strengthen the currency when need be.

More specifically, higher interest rates generally cause (Scott Sumner forgive me for this gross oversimplification) lower inflation, a stronger currency, higher unemployment, and lower economic growth. This meant that when the Bank of England pegged its currency too high, it was forced to make the real sector of the economy suffer. And in 1992 the country was in a recession. This meant that the Bank of England wanted to lower interest rates to help the economy recover. But it could not do that because this would in turn lead to currency depreciation, breaking the peg to the Mark. What now?

Well, if you know anything about the UK, you probably realize that their solution to every economic crisis is to say “sux” and hope that it gets better on its own. But in this one instance, the Bank of England had a savior in the form of Soros. By shorting the equivalent of 10 billion pounds, Soros made it extremely difficult for the BoE to maintain the fixed exchange rate. In fact, it led to an extremely funny instance of them announcing an interest rate hike at 11AM and canceling it at 7:30PM. This was because they could no longer justify making the economy suffer because of a stupid number.

As a result, the United Kingdom ended its exchange rate peg to the Deutsche Mark. The pound devalued to 2.42 marks by end of year and the economy started growing. The economy recovered because it was not held back by insane monetary policy.

If not for Soros, the UK would’ve been forced to keep interest rates high to keep the pound afloat. The recovery would have been much slower and the country would undergo grain pain. Just ask the US during the Great Depression.

Ultimately, this is the story of a man who used the free-market mechanism to defeat the government and prevent it from making its own population suffer with idiotic policy choices. It is the story of the individual triumphing and causing an improvement in the lives of the masses for extremely counter-intuitive reasons. If that is not deserving of the Presidential Medal of Freedom, then nothing is.