Some of us are relishing what by all accounts appears to be a successful recession-resistant soft landing that was enabled, at least in part, by the management of interest rates by the Federal Reserve bank. But some of us also might be a little bummed. Pandemic stimulus led to non-trivial inflation for the first time in 30 years that had real consequences for the economy. Those issues were confronted by policy makers at the Federal Reserve bank who did their part to raise interest rates that ease us out of this inflationary window without triggering a recession. Those consecutive events, stylized facts even, appear to have left “Modern Monetary Theory” in shambles. I only interject the “appear to” qualification because MMT is a theoretic vacuum that better serves as a quasi-economic Rorschach test than falsifiable model. What are we to do without our favorite economic punching bag? What could ever unite us all, Keynesians, New Keynesians, Neoliberals/New Liberals, Monetarists, Austrians, like defending the shared empirical reality that money is real, printing money isn’t a policy free lunch, and hyperinflation is an economic tragedy to be taken deadly serious?

Well, don’t fret. There’s one more gift not everyone has opened yet. The gift that is “degrowth”. Not unlike MMT, degrowth is a little tricky to pin down. The central tenet, if there is one, is that economic growth needs to be both reversed and re-defined. That we all need to learn to live with less. As best I can tell. I guess I could link to Jason Hinkel’s book…but I don’t want to. If wikipedia is to be trusted: “The main argument of degrowth theory is that an infinite expansion of the economy is fundamentally contradictory to the finiteness of material resources on Earth”. I’m not going to spend an entire blog post dismantling this school of thought that is somehow both amusingly silly and darkly bleak in what it speaks of it’s advocates. Though spare me this one shot at an obviously wrong idea: the entire point of economic growth is that the economy can, in fact, expand forever, because new ideas (i.e. technology) and exchange both add value to the world without requiring any additional material resources (i.e. they are “non-rival”). There will never be an end to new ideas and, given those new ideas, there will never be an end to the prospective gains from exchange. Are we done here?

Of course not, don’t be silly. There are careers to be had. Keynotes to be given. Books to sell. Conferences to host. I took a shot at this on twitter, but I’m actually far more sanguine on the subject than I come across in my grim little tweet.

I’m emotionally unburdened by the attention paid to degrowth for the same reason I slept fine knowing MMT advocates were out their peddling their terrible policies. I take it as a sign of good health within the broader discipline of economics that for all of our squabbles, most of us are speaking the same language and engaging with an objective reality. Which is not to say that there aren’t knock-down, drag-out arguments about what we are observing empirically and what it means, but everyone knows what it is we are arguing about. There’s no Sokal hoax on the horizon for economics. The data is real. The policies are real. The consequences of bad decisions are very, very real.

What that means is that when a tribe forms around bad ideas and pushes them into the broader public, they have to defend those ideas. And their defense can’t elude criticism with nothing but rhetorical sleight of hand or pandering to fortified political identities for shelter from the scholarly storm. At least not for long. Whether they like it or not, their ideas will have to come into contact with reality, with formal rigor, with the data. There’s no postmodern escape hatch - to be exposed as unfasifiable is to fail at first contact. *

Yes, bad ideas can get you tenure somehwere. Or a letter published in Nature. Or a nice circuit of hosts willing to prop you up as the academic scribbler to provide the intellectual scaffolding their political movement is desperate for. But you’re not going to matter to the discipline. Your terrible, vacuous ideas will be confronted, considered, and then dismissed. No harm, no foul.

That these ideas can enter the arena at all is a sign of excellent health within the discipline. You can posit some truly wild ideas and still get them in front of the global jury of economists. You don’t have to be a Harvard economist. You don’t even have to be an economist. No position of power, no union card. The doors are open. That doesn’t mean, however, that you’re going to get a show. There’s no minimum stage time owed. Your ideas are terrible, get off the stage, next. You expected to come home from the battle either with your shield or on it, a grand warrior exposing the soft underbelly of the dismal dragon, but turned out to be just another 5 seconds of empty calories. You didn’t get what you wanted from this belch of a conflict, but the economists sitting together in the jury box did get something: a reminder that we’re all doing the best we can. We’re hissing and fighting, but only because we care. We’re trying to do it right, which is hard, and but that’s what matters the most at the end of the day. The trying.

*Sometimes what looked, to some or most, to be bad ideas turn out to, in fact, be good ideas. Great ideas, even, the kind that move the discipline forward. That’s actually the most beautiful part, that small minority of ideas that look too far afield to be taken seriously only to survive these trials by fire and become internalized in the broader mainstream of economics. Ironically, this often proves a harder test for many members of the revolutionary factions. From my own interactions, I would note that the internalization of “public choice” into the broader mainstream of economics as “political economy” proved hard for some scholars to adapt to.

Whether it’s a high holiday or just a nice day to get Chinese food with your family and watch old movies, I hope you all have the very best Christmas possible, no matter what that means for you. But do take the day off if at all possible and, if the opportunity arises, make it a little easier for those who can’t.

I’m on Bluesky. I’m on twitter/X. I’m not happy with either right now. I wasn’t particularly happy on twitter before, but that was before it became much worse, so now I wish it could back to the way it was, when I was also complaining, because it turns out the counterfactual universe where it was different is actually worse. So here we are.

The decline in my personal portfolio of social media largely comes down to critical mass. The decline in Twitter usage has reduced its value to me (and most of its users). Only a tiny fraction of this loss in Twitter value is offset by the value I receive from Bluesky for the simple reason it doesn’t have enough users. Even if 100% of Twitter exits had led to Bluesky entrants, it would still be a value loss because the marginal user currently offers more value at Twitter. Standard network goods, returns to scale, power law mechanics, yada yada yada.

Now, to be clear, Twitter is still well above the minimum critical mass threshold for significant value-add, but the good itself has also been damaged by Elon’s managerial buffoonery. Bluesky, depending on your point of view and consumer niche, hasn’t achieved a self-sustaining critical mass (e.g. econsky hasn’t quite cracked it, unfortunately). The result is a decent number of people half-committing to both, which only serves to undermine consumer value being generated in the entire “microblogging” social media space.

The problem, simply put, is that Twitter still has too much option value to leave entirely. If (when) Elon get’s the mother-of-all-margin-calls, he’ll likely have to sell Twitter or large amount of his Tesla holdings. If he’s smart and doesn’t cave in to the sunk cost fallacy (a non-trivial “if”), he’ll sell Twitter. If new ownership successfully returns Twitter to suitable fascimile of it’s previous form, people will come flooding back, Bluesky will turn-off or wholly adapt into a new consumer paradigm, and everyone will be thrilled to have squatted on their previous accounts.

If Twitter retains its current form, then it will probably die, though not at the direct hands of Bluesky. More likely it will be displaced by some new product most of us don’t yet see coming, as the next generation departs twitter the way millenials departed Facebook for Snapchat and, eventually, TikTok. Perhaps counterintuitively, this outcome is actually excellent for Bluesky, because the absence of twitter will send the 3% of “professional” twitter users (economists, journalists, thinktank wonks, policy makers, etc) to Bluesky, where they will achieve niche critical mass and live happily ever after (at least as happy as one can be whilst immersed in a sea of status-obsessed try-hards).

But for the moment, we’re all a little stuck trying to make do with finding fulfillment in the complex personal lives, loving families, transcendant art, and multidimensional experiences that remain confined to meatspace. We can only do our best and remain strong during such trying times.

Did you know you could make a Godzilla movie, maybe the best one at that, for $15 million dollars (or 3 minutes of Chris Pratt in “End Game”, if you’d prefer numeraire)? This film, in which Godzilla is basically the demon baby of Jason Voorhees and the shark from Jaws, deftly explores concepts of guilt, shame, redemption, forgiveness, and family. I cried at the end. I repeat, I cried at the end of a Godzilla movie.

In the last month I’ve watched a Godzilla movie that is specifically constructed to recreate the feeling of a 1950s monster movie, a flawed but admirable attempt to make a modern Charlie Chaplin movie (Fool’s Paradise), and a watchable if uneven and wholly debauched variation on “Singin’ in the Rain” (Babylon). I don’t think this is a coincidence. I think this is a response to VFX and super hero (not comic book) movie fatigue. One way to do that is to go backwards, not in subject matter or setting necessarily, but in story composition and construct. The performances in all three films felt more stage than screen. Texture was emphasized over shock and awe. Emotional crescendos felt more earned than manipulated. I’m not saying these three films are perfect or even necessarily good. What I’m saying is that they felt like a return to older form of film as a medium.

For the last 15 years we’ve had a lot of “remakes” that attempted to modernize old films. Don’t be surprised if we see the inverse going forward: new, original stories filmed in a manner that feels older. “The Thing” but it’s a sea alien on an oil platform, everything wet and on fire. “All the Presidents Men” but it’s a coverup in local Iowa government, with scratchy sunken sofas and life-changing smoke breaks. “Working Girl” but it’s Zendaya and Scarlett Johannsen in a fully modern context, where a misread text subverts an expected plot turn on a broken iPhone screen. Not for a love of classic cinema mind you, or even art, but because making 10 to 1 on winners and losing next to nothing on flops is a business proposition more than a few studios are likely to find enticing.

Go see “Godzilla Minus One”.

I’m wrapping up grading for the semester. So this one is super short. What will I be writing about in the upcoming weeks. Here’s a sneak peak:

1. I will read the course evaluations and let you know how my Game Theory Course changes fared.
2. I’ll discuss a little bit of the new DID Stata methods. I’ll keep it short and sweet provide an example.
3. I want to share some thoughts on objectivity, unreasonable academic charity, and our ability to interpret evidence using multiple models.
4. Squeezing out more time efficiencies in your home life (Especially for parents)
5. There are too many A’s in my Principles of Macroeconomics class.

These are what’s on the Horizon. I’ll link back here to stay on track. Have a great weekend!

The key to successful public forecasting is to choose a subject that is too costly for your critics to formally measure. In keeping with such a spirit of low risk public posturing, I am hereby calling it: peak pessimism is now behind us. Which is not to say that people think things are fine, but rather that the gap between how things actually are (pretty good!) and how people think they are (kinda bad) is much smaller than the gap was six months ago (historically bad, even though they were pretty good then too!). The gloom of sunny days benighted by the goth-tinted glasses of an anxiety-serving media amplified by the terminally online is finally breaking.

For me, the real bellweather was the general non-response to a NYT article and Siena poll that said Biden was likely to lose to Trump head-to-head next November. Six months ago this would have received breathless coverage, with non-stop amplification on social media. What I observed instead was a lot of hand-waving and dismissal of an attempt for political panic clickbait.

So what’s my reasoning? In a nutshell, rational pessimism.

I’m a big believer in ecological rationality i.e. a lot of our seemingly irrational biases are actually relatively optimal behaviors when viewed in the long term for individual survival or cultural/group selection. Pessimism is an expressed preference for fewer negative surprises. From a households perspective, being surprised by a negative shock is far more dangerous to economic survival than being surprised by or even missing out on positive shocks. Choosing to rent intstead of buying a house in 2000 was, in hindsight, problematic, but not nearly so dangerous to your economic survival as buying a house in December of 2007. Not to get too Lamarckian on you, but it’s not crazy to say that the pandemic was such a (Knightian/Black Swan) shock to a lot of people that they updated their entire model of the economy to include the possibility of an entirely new kind of negative economic shock and, as a result, their new strategy is far more pessimistic. They very badly don’t want to be surprised again.

But that doesn’t mean they are done updating. At some point the good news is just too good to ignore. Employment is too good, wages are too good. New vaccines are too good. Climate data is…well that’s still pretty bad, but hey look, solar is happening! Good news, however, is an erosive force running against a freshly built wall of pessimism designed for the express purpose of protecting a household from the next negative shock. We shouldn’t be surprised if it takes a lot of good news a long time to break it down.

But it will break down. I’m not saying when it will break down, but the cracks are finally starting to show. Pessimism may be ecologically rational, but optimism always has an irresistible allure for those who don’t want to miss out. We’re starting to get the good news because people are starting to want it, even if only just a little bit. And media customers always get what they want.*

* Which is not to say that Fox News and similar outlets won’t remain consistently negative. Political and age-demographic demands for “everything is going to hell” aren’t going to change any time soon. They will also keep getting what they want.

I’ve thought it over and decided not to write a post this week. It’s not that I have writer’s block. I am writing plenty in the dimensions of my profession that dominate my time (and actually pay me). And I have a back catalog of “bigger” pieces I might write later. But there is nothing I am compelled to write today. Which is what I want to write about.

We all share editorials and thinkpieces with each other, whizzing around social media and email, getting discussed over meals and beverages. This content is produced in mass and at breakneck speed. Some people are very good at it. Others less so. Some people, over time, rise to a level of recognition that they are offered plum spots at major outlets, lavished with salaries greater than I will certainly ever enjoy. Their names acquire significant fame, their opinions serving as the substrate for millions of conversations.

And then we savage them.

Sometimes we savage their works because they are signaling the wrong politics and identities. That’s just life. Sometimes we savage their writing because they’re rich and famous, which is annoying, but that’s just the tax a person pays for being eminent (see Swift, Jonathan). But often, more often than they would likely want to admit, we savage their writing as poor and ill-conceived because it is poor and ill-conceived.

Let’s be clear: these people are largely critical thinkers and phenomenonal writers. But they are also on a deadline. Opinions, unlike news, do not appear in our minds fully formed and their subsequent development does not always adhere to a regular schedule. My writings here are essentially an unpaid hobby. I haven’t missed many weeks this last 3 years, but I’ve missed a few. Some weeks I totally mail it in and just write a few paragraphs about a research paper I read that I thought was cool. The New York Times editorial page does not indulge such academic capriciousness.

Would I invest a lot more time in these posts if the NYT was paying me a hefty salary? Of course. I would have stockpiles of evergreen columns, folders of half-written ideas, a corkboard littered with post-its cataloging my every idea that might support a column. But even then I can’t help but suspect that I might occasionally find myself staring down a deadline with nothing I want to say, or with a drafted piece that I know isn’t very good.

And that’s why I think we get the so many big-name editorials that social media descends on like gleeful hyenas, merrily yanking and ripping until the every vacuous subject and failed predicate has yielded it’s final LOL. Why do columnists collectively produce so much dreck? Because they write too much. Scratch that. Because they publish too much.

Which is why I’m not writing a post this week.

(To be clear out of an abundance of caution, this observation does not pertain to those glorious blogs and substacks that mostly produce data-driven analysis and subject-matter deep dives, rather than bloated opinions designed to foment clicks. You are god’s perfect children, never change.)