This is really top-drawer commentary from Lorenzo.
I would go even further on some matters.
Say, if Japanese, in a democratic fashion, essentially say something like, "Yes, we could have a higher material living standard with more immigration---but we prefer to remain Japanese, we value and honor our traditions, language, culture, religion, neighborhoods, manners, customs and more. We willingly accept lower material living standards." ---I think that is fine.
Somehow, Western democracies got hoodwinked into thinking that opposing immigration was equal to the worst sort of prejudice and racism.
In economics there is a term for compensation that is not monetary, called psychic income.
There is no doubting psychic income is "real"; imagine telling a devoted fan at a soccer match you will give him $10 to switch sides. Here is an extra jersey I have.
Why should not a shared sense of national pride be treated as valid psychic income?
There is more, as who is behind the idea that national borders should be erased for the transfer of labor, capital and business enterprise. No doubt globalized trade has some benefits, and just as surely there is an international commercial class that benefits most from such arrangements.
We could add, at least the in US, who benefits from the import of illegal cheap labor?
BTW, 75% of econ grad students in the US are foreign-born. Thank about that, and the effect on policy preferences.
There has long been a near obligation in academic circles (in the US) to appear cosmopolitan and unbiased, as opposed to nationalistic.
On my day on campus (too long ago to admit) no prof would be caught dead driving a Cadillac, even if gifted, but had to have a Volvo or Saab, or some other European brand. Not a Volkswagen bug, as that might be confused as the vehicle of a mere grad student. That too is a form of psychic income.
Great piece. From my perspective as an American, the 21st century has repeatedly demonstrated that our expert class and cultural/political leadership tend to be total intellectual sheep once they latch onto a concept as good and stampede the rest of society off the cliff. We have had the mortgage crisis (homeownership is good for everyone), the higher education debt and quality crisis (college is appropriate for everyone), DEI (diversity is good in all circumstances and must be imposed), and immigration (all economic and cultural upside regardless of numbers or place of origin). On foreign policy we also had the catastrophic idea that democracy is the best system for any society and could civilize the Islamic world and pursued that for 20 years, wasting trillions of dollars and thousands of Western lives. Frankly, I can’t think of a successful policy innovation this century that has bettered the lives of our citizens.
Not disagreeing with your other items cited, but perhaps the development of 401K's, IRA's, and Roth IRA's in the US might be considered successful policy innovations of the 20th century. Of course then people have to be disciplined about contributing to them.
Are there selected examples of types of insurance for risk mitigation that were also 20th or 21st century innovations? Insurance is/was a marvelous invention when initially established and later moved into other areas for social betterment.
I agree with this post, but I have to report where my thoughts led me.
Trying conjure an reductio of absurdly bad immigrant selection, I thought "What if had a policy of admitting the criminals of some far away country. That country would obviously be happy to for us to relieve them of expensive jailbirds. But where would Australia be if we had done such a thing!".
One thing I rarely see mentioned in regards to immigration is how Mexico lost Texas and later on several other states due to US migrants. I don't know why this isn't being brought up more often.
Mexico assumed it would benefit the economy to bring in US migrants, as long as the migrants learned the language and took on the religion. But too many came, they rebelled and kicked the Mexicans out.
Isn't that a potentially very serious negative effect of immigration? Why is it ignored?
They came in peace, until they realized they could take over.
If you think that when non-Europeans will become a majority, they will treat you nicely, you have a surprise coming. By the way, I thought black republicans were OK, unlike democrats, and statistics show that I was misguided here too. We always want to believe in goodness...
On the other hand, BBC World Service makes a big deal about demoncrapcy in Hong Kong, and Jimmy Lai. Fair enough...
Seriously, BeeB, how about your own democracy in your country, where people can be imprisoned for years for a 'like' on X of a mildly critical of immigration post, and thousands are? Zero credibility BBC.
Absolutely correct. As Lorenzo notes, aside from culture on its own, which is very important, genetics of groups is also important both from perspective of intelligence and from perspective of inherited personality traits (contrary to delusional blank slatists) which if group becomes majority of population (or self-isolated in ethnic enclave) influences a default culture.
Here is nice latest chart from Cremieux, it tells volumes:
Your points on academics remind of my example of Kaufmann, that I noted a few days ago. How he understands some things about uniqueness of Trump and his policies, and how little he understands of reasons or inevitabilities of things he criticizes from his high academic perch. And he is one of the good ones; same goes for Pinker, he has some good points, but then he has TDS blinders the size of a barn door. Or, as Lorenzo noted, an academic can be only a little maverick (and a rare one), any more of it, and he will be excommunicated.
I just got a chance to look into that and I am not surprised. I have long suspected that people who say they use a colorblind method really do. I do. It's how I was raised.
One minor item that impacted my reading was from the quote of Adam Smith, where he used the word "chuse". I was surprised at just how much that spelling "disturbed" me. Once I had learned "choose", any alternatives are just "not right!!".* Even when his spelling is actually more phonetic (and possibly linguistically better?)
Now, back to dumping on economists. :-) Back in my pre-1971 two semesters of college economics, the professor made a point to telling his engineering/math oriented students that even economics had some pretty sophisticated math associated with it. And that was back when they followed the physicists in "assume a spherical cow" type analyses. Imagine what they might have achieved if they had folded the complexities of other social science thinking into their modeling. Spheres up and down the landscape!
*we of course live with the "s" vs "z" shifts between English and American spellings, and get along just fine.
And then just now I stumbled upon this language in our Constitution:
"The Times, Places and Manner of holding Elections for Senators and Representatives, shall be prescribed in each State by the Legislature thereof; but the Congress may at any time by Law make or alter such Regulations, except as to the Places of chusing Senators.”
Oh well, I guess "chuse" doesn't bother me all that much after all! :-)
One of the best economists on immigration and population growth with a mainstream friendly lens is a bloke named Michael Reddell across the ditch in NZ.
If you debate interest rates nobody says you are ANTI capitalism for suggesting a rate change be considered. Yet with immigration any talk of lowering is decried a step into xenophobic retard land.
I've discovered the closest thing to somebody who can explain precisely the causes of the building economic malaise: ex-Citibank trader Gary Stevenson. He has been fighting a reasonably successful campaign on YouTube trying to get his voice heard. He has framed his idea around "the great squeeze-out" neatly explained in this video:
There are many others but the above is pretty representative. Adding to his credibility is studious avoidance of the word "socialism" which is unfortunately the reflexive recourse to so many people. His major shortcoming is the reluctance to address the mass immigration issue - he correctly asserts working people need to stand together against the elites, but doesn't acknowledge that mass immigration is a major tool for enacting this squeeze-out.
He is coming to Australia this month and I'm keen to see him in Melbourne.
There is a well-established dynamic in mercantile societies that long periods of peace tend to generate increased inequality and this can mean a squeezing out of the middle class. (See the Late Roman Republic.)
But this increase in inequality can also occur with a massive expansion in the middle class—see C19th US and UK. The difference is that the latter two were much more technologically dynamic societies. Total wealth was expanding way faster than any concentration tendencies, with any increase in inequality coming from the increase in the spread of wealth.
States are bad managers of assets. Also, the expansion of the welfare state meant that states could no longer tolerate the revenue-suppression effects of very high marginal taxes. Neither the welfare state, nor the apparatus to run it, are a stable equilibrium.
Immigration plus land-use regulation are why house prices are ridiculous. There is nothing “natural” or inevitable about it. (The influx of slaves had a lot to with wealth inequality and squeezing out the middle class in the late Republic.)
His analysis of the origins of the World Wars is ridiculous. In fact, state dynamics seem to be a big hole in his thinking.
Also countries are not poor because they are unequal, they are unequal because they are poor. Now, the inequality can certainly be tied up with growth-suppression policies, institutions, cultural patterns. But, to take the example of fixing the African kid’s eyesight, the wealth was never there in that society to do it at scale.
It is worth thinking about patterns in flow of assets: but also in the creation of assets, and what blocks or facilitates the creation of assets.
Also, societies where the government had ALL the assets, turn out badly. Why did the Soviet Union essentially go bankrupt?
Moreover, no society has replicated his pattern. Rome was not a society of massive poverty. Ordinary Romans continued to live surprising well for some centuries.
What he has reproduced is a colloquial version of Marx’s concentration model, concentrating on assets rather than the bullshit labour theory of value.
Capital/labour ratios never produce immiseration. It is population/land ratios that do, and we are back to mass immigration and land use regulation—at least some of which is motivated by property tax and capital gains tax revenues.
We must have a very different take on Stevenson. But I'll gladly take you up on your last question - because I believe it is the absolute key to the cause of the current economic malaise.
I believe the absence of growth is caused by resource starvation ie of capital investment. And the cause of this resource starvation is massively misaligned incentive structures that incentivise people with investable capital to allocate it into existing asset pools like established housing. It is this process that has caused both the asset price bubble AND growth lag because money (ie QE cash) floods into such assets while being denied to truly productive activity like new businesses/sectors.
These two are obverse & reverse - Jeremy Grantham (British Warren Buffett) claims we are in a 3-sigma superbubble for example. Economists' main job has been disguising the price bubble as growth when in reality it should be classified as inflation (this chicken is coming home to roost now). The other "growth magic trick" has of course been importing consumers to artificially stimulate consumption to avert formal recession (but still endure p/c ones).
Consider this: imagine you had $ to invest in subdividing land & building several houses vs buying one established house in a leafy suburb then selling it later. If regulatory structures are such that the latter makes you more $ with less fuss and then has a lower taxation burden of course the rational person will take the second option.
Repeat by a million and extend across many markets and economies and you have precisely that: price bubbles in existing asset pools combined with resource starvation is productive fields. Stevenson's analysis is consonant with this since his root argument (which is objectively true) is that rich people don't spend their surplus money but buy assets with it.
The current taxation structures reward rent seeking and speculation rather than productive work & investment. Reweighting them to fall more onto assets and away from incomes is the primary tool that would unblock growth again.
"But immigration, it can’t be done badly, it’s just inherently good. I am sorry, why the f#@k do we listen to economists when they talk such f#@k-witted nonsense as immigration is just naturally good?"
Immigration IS inherently good for the decedents of immigrant populations. - Just ask members of any indigenous group from anywhere in the world.
It's a pattern that has repeated at least since the neolithic.
Outstanding analysis and pulling together the strings of though into a coherent position as always.
We really need to start a nice big new university just so we can put Lorenzo in charge of it.
I also think the coining of the term Theory-Fool is a piece of genius.
Aiy, if only we could have 100 Lorenzos....
This is really top-drawer commentary from Lorenzo.
I would go even further on some matters.
Say, if Japanese, in a democratic fashion, essentially say something like, "Yes, we could have a higher material living standard with more immigration---but we prefer to remain Japanese, we value and honor our traditions, language, culture, religion, neighborhoods, manners, customs and more. We willingly accept lower material living standards." ---I think that is fine.
Somehow, Western democracies got hoodwinked into thinking that opposing immigration was equal to the worst sort of prejudice and racism.
In economics there is a term for compensation that is not monetary, called psychic income.
There is no doubting psychic income is "real"; imagine telling a devoted fan at a soccer match you will give him $10 to switch sides. Here is an extra jersey I have.
Why should not a shared sense of national pride be treated as valid psychic income?
There is more, as who is behind the idea that national borders should be erased for the transfer of labor, capital and business enterprise. No doubt globalized trade has some benefits, and just as surely there is an international commercial class that benefits most from such arrangements.
We could add, at least the in US, who benefits from the import of illegal cheap labor?
BTW, 75% of econ grad students in the US are foreign-born. Thank about that, and the effect on policy preferences.
There has long been a near obligation in academic circles (in the US) to appear cosmopolitan and unbiased, as opposed to nationalistic.
On my day on campus (too long ago to admit) no prof would be caught dead driving a Cadillac, even if gifted, but had to have a Volvo or Saab, or some other European brand. Not a Volkswagen bug, as that might be confused as the vehicle of a mere grad student. That too is a form of psychic income.
Great piece. From my perspective as an American, the 21st century has repeatedly demonstrated that our expert class and cultural/political leadership tend to be total intellectual sheep once they latch onto a concept as good and stampede the rest of society off the cliff. We have had the mortgage crisis (homeownership is good for everyone), the higher education debt and quality crisis (college is appropriate for everyone), DEI (diversity is good in all circumstances and must be imposed), and immigration (all economic and cultural upside regardless of numbers or place of origin). On foreign policy we also had the catastrophic idea that democracy is the best system for any society and could civilize the Islamic world and pursued that for 20 years, wasting trillions of dollars and thousands of Western lives. Frankly, I can’t think of a successful policy innovation this century that has bettered the lives of our citizens.
Not disagreeing with your other items cited, but perhaps the development of 401K's, IRA's, and Roth IRA's in the US might be considered successful policy innovations of the 20th century. Of course then people have to be disciplined about contributing to them.
Are there selected examples of types of insurance for risk mitigation that were also 20th or 21st century innovations? Insurance is/was a marvelous invention when initially established and later moved into other areas for social betterment.
Everything.
Brilliant!
Superb.
I agree with this post, but I have to report where my thoughts led me.
Trying conjure an reductio of absurdly bad immigrant selection, I thought "What if had a policy of admitting the criminals of some far away country. That country would obviously be happy to for us to relieve them of expensive jailbirds. But where would Australia be if we had done such a thing!".
And of course that actually did have consquences that are with us to this day. For instance, it explains this: https://www.youtube.com/watch?v=eNvkCVvhIvg&list=RDeNvkCVvhIvg
One thing I rarely see mentioned in regards to immigration is how Mexico lost Texas and later on several other states due to US migrants. I don't know why this isn't being brought up more often.
Mexico assumed it would benefit the economy to bring in US migrants, as long as the migrants learned the language and took on the religion. But too many came, they rebelled and kicked the Mexicans out.
Isn't that a potentially very serious negative effect of immigration? Why is it ignored?
They came in peace, until they realized they could take over.
Excellent historical example. Thank you for reminding me, I will use it in future.
And here is another study on tolerance and how it potentially relates to immigration:
https://x.com/ArtemisConsort/status/2021654761154674894?s=20
If you think that when non-Europeans will become a majority, they will treat you nicely, you have a surprise coming. By the way, I thought black republicans were OK, unlike democrats, and statistics show that I was misguided here too. We always want to believe in goodness...
On the other hand, BBC World Service makes a big deal about demoncrapcy in Hong Kong, and Jimmy Lai. Fair enough...
And here is BeeB story on "Ratcliffe says sorry his language 'offended some people' after criticism of immigration comments" https://www.bbc.com/news/live/cdjm3n8yrwnt
Seriously, BeeB, how about your own democracy in your country, where people can be imprisoned for years for a 'like' on X of a mildly critical of immigration post, and thousands are? Zero credibility BBC.
Absolutely correct. As Lorenzo notes, aside from culture on its own, which is very important, genetics of groups is also important both from perspective of intelligence and from perspective of inherited personality traits (contrary to delusional blank slatists) which if group becomes majority of population (or self-isolated in ethnic enclave) influences a default culture.
Here is nice latest chart from Cremieux, it tells volumes:
https://x.com/cremieuxrecueil/status/2021413669066961266?s=20
Your points on academics remind of my example of Kaufmann, that I noted a few days ago. How he understands some things about uniqueness of Trump and his policies, and how little he understands of reasons or inevitabilities of things he criticizes from his high academic perch. And he is one of the good ones; same goes for Pinker, he has some good points, but then he has TDS blinders the size of a barn door. Or, as Lorenzo noted, an academic can be only a little maverick (and a rare one), any more of it, and he will be excommunicated.
I hope Noah Smith and others read this and let it sink in. The biggest problem I see happening across the board is the 2-tiered everything.
Yes, two-tiered: https://x.com/ArtemisConsort/status/2021654761154674894?s=20
I just got a chance to look into that and I am not surprised. I have long suspected that people who say they use a colorblind method really do. I do. It's how I was raised.
Very nice dot-connecting, as usual.
One minor item that impacted my reading was from the quote of Adam Smith, where he used the word "chuse". I was surprised at just how much that spelling "disturbed" me. Once I had learned "choose", any alternatives are just "not right!!".* Even when his spelling is actually more phonetic (and possibly linguistically better?)
Now, back to dumping on economists. :-) Back in my pre-1971 two semesters of college economics, the professor made a point to telling his engineering/math oriented students that even economics had some pretty sophisticated math associated with it. And that was back when they followed the physicists in "assume a spherical cow" type analyses. Imagine what they might have achieved if they had folded the complexities of other social science thinking into their modeling. Spheres up and down the landscape!
*we of course live with the "s" vs "z" shifts between English and American spellings, and get along just fine.
And then just now I stumbled upon this language in our Constitution:
"The Times, Places and Manner of holding Elections for Senators and Representatives, shall be prescribed in each State by the Legislature thereof; but the Congress may at any time by Law make or alter such Regulations, except as to the Places of chusing Senators.”
Oh well, I guess "chuse" doesn't bother me all that much after all! :-)
One of the best economists on immigration and population growth with a mainstream friendly lens is a bloke named Michael Reddell across the ditch in NZ.
If you debate interest rates nobody says you are ANTI capitalism for suggesting a rate change be considered. Yet with immigration any talk of lowering is decried a step into xenophobic retard land.
I've discovered the closest thing to somebody who can explain precisely the causes of the building economic malaise: ex-Citibank trader Gary Stevenson. He has been fighting a reasonably successful campaign on YouTube trying to get his voice heard. He has framed his idea around "the great squeeze-out" neatly explained in this video:
https://www.youtube.com/watch?v=pUKaB4P5Qns
There are many others but the above is pretty representative. Adding to his credibility is studious avoidance of the word "socialism" which is unfortunately the reflexive recourse to so many people. His major shortcoming is the reluctance to address the mass immigration issue - he correctly asserts working people need to stand together against the elites, but doesn't acknowledge that mass immigration is a major tool for enacting this squeeze-out.
He is coming to Australia this month and I'm keen to see him in Melbourne.
There is a well-established dynamic in mercantile societies that long periods of peace tend to generate increased inequality and this can mean a squeezing out of the middle class. (See the Late Roman Republic.)
But this increase in inequality can also occur with a massive expansion in the middle class—see C19th US and UK. The difference is that the latter two were much more technologically dynamic societies. Total wealth was expanding way faster than any concentration tendencies, with any increase in inequality coming from the increase in the spread of wealth.
States are bad managers of assets. Also, the expansion of the welfare state meant that states could no longer tolerate the revenue-suppression effects of very high marginal taxes. Neither the welfare state, nor the apparatus to run it, are a stable equilibrium.
Immigration plus land-use regulation are why house prices are ridiculous. There is nothing “natural” or inevitable about it. (The influx of slaves had a lot to with wealth inequality and squeezing out the middle class in the late Republic.)
His analysis of the origins of the World Wars is ridiculous. In fact, state dynamics seem to be a big hole in his thinking.
Also countries are not poor because they are unequal, they are unequal because they are poor. Now, the inequality can certainly be tied up with growth-suppression policies, institutions, cultural patterns. But, to take the example of fixing the African kid’s eyesight, the wealth was never there in that society to do it at scale.
It is worth thinking about patterns in flow of assets: but also in the creation of assets, and what blocks or facilitates the creation of assets.
Also, the rich are way more mobile than they used to be. British Labour is attempting to tax the rich: the rich just flee.
He could go all Georgist—land cannot move. But land taxes are part of the motivation for restrictive land use regulation.
Also, societies where the government had ALL the assets, turn out badly. Why did the Soviet Union essentially go bankrupt?
Moreover, no society has replicated his pattern. Rome was not a society of massive poverty. Ordinary Romans continued to live surprising well for some centuries.
What he has reproduced is a colloquial version of Marx’s concentration model, concentrating on assets rather than the bullshit labour theory of value.
Capital/labour ratios never produce immiseration. It is population/land ratios that do, and we are back to mass immigration and land use regulation—at least some of which is motivated by property tax and capital gains tax revenues.
We must have a very different take on Stevenson. But I'll gladly take you up on your last question - because I believe it is the absolute key to the cause of the current economic malaise.
I believe the absence of growth is caused by resource starvation ie of capital investment. And the cause of this resource starvation is massively misaligned incentive structures that incentivise people with investable capital to allocate it into existing asset pools like established housing. It is this process that has caused both the asset price bubble AND growth lag because money (ie QE cash) floods into such assets while being denied to truly productive activity like new businesses/sectors.
These two are obverse & reverse - Jeremy Grantham (British Warren Buffett) claims we are in a 3-sigma superbubble for example. Economists' main job has been disguising the price bubble as growth when in reality it should be classified as inflation (this chicken is coming home to roost now). The other "growth magic trick" has of course been importing consumers to artificially stimulate consumption to avert formal recession (but still endure p/c ones).
Consider this: imagine you had $ to invest in subdividing land & building several houses vs buying one established house in a leafy suburb then selling it later. If regulatory structures are such that the latter makes you more $ with less fuss and then has a lower taxation burden of course the rational person will take the second option.
Repeat by a million and extend across many markets and economies and you have precisely that: price bubbles in existing asset pools combined with resource starvation is productive fields. Stevenson's analysis is consonant with this since his root argument (which is objectively true) is that rich people don't spend their surplus money but buy assets with it.
The current taxation structures reward rent seeking and speculation rather than productive work & investment. Reweighting them to fall more onto assets and away from incomes is the primary tool that would unblock growth again.
But, but, but, but.....
"But immigration, it can’t be done badly, it’s just inherently good. I am sorry, why the f#@k do we listen to economists when they talk such f#@k-witted nonsense as immigration is just naturally good?"
Immigration IS inherently good for the decedents of immigrant populations. - Just ask members of any indigenous group from anywhere in the world.
It's a pattern that has repeated at least since the neolithic.