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Eric Kramer

Articles by Eric Kramer

Martin Wolf has a new book coming out . . .

February 8, 2023

. . . called The Crisis of Democratic Capitalism, and he was interviewed by Rob Johnson on the Economics & Beyond podcast.  Here’s a quote from 50:20 in the pod (my transcription, done before I saw the official transcript at the link):

Now a core thesis of my book . . . is that If you want a capitalist order, and if you want democracy . . . then you must accept that the free market will have to be contained within and tempered by an active state which provides fundamental security to all its citizens because it’s something they’re all going to demand . . . and that where fundamental problems arise of all kinds environmental . . . problems with bringing up children, social problems of severity . . . the state exists as an insurance mechanism, as an

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Democrats, let’s turn the debt ceiling standoff into a referendum on Social Security, Medicare, and Medicaid

February 3, 2023

President Biden has so far insisted he will not negotiate over the debt ceiling.  This makes sense on one level.  The Republicans are threatening to blow up the economy to get the Democrats to agree to – and share the blame for – unpopular budget cuts.  It is easy to see why Democrats want to resist going down this path.

Just saying “no” to negotiations may not work

But in the real world things are not so simple.  The House Republicans may pass a debt ceiling bill that includes spending cuts.  They are trying to find cuts that voters find acceptable if not appealing.  Proposals have been floated to cut spending on IRS enforcement, to implement work requirements for Medicaid, to claw back unspent covid funds, and to end the Covid state of

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Kevin Hassett:  The Road to Serfdom meets the debt ceiling

January 30, 2023

Ordinarily you would not drive a motorcycle without a headlight down a narrow, winding mountain road at high speed on a dark, rainy night.  But you would do this if your child is dying and you need to fetch a doctor immediately.  Even sensible people take great risks to avoid an imminent catastrophe. 

Kevin Hassett, chairman of Trump’s Council of Economic Advisors, applies this logic to the debt ceiling in a post at National Review subtitled “Fiscal-policy brinkmanship might be the only thing that can save us from catastrophe”. 

Let’s look.  Here are some of Hassett’s key points:

Small-government conservatives have been outraged by our profligacy for decades, of course, but the stakes are getting very, very high. The fact is that if we don’t

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ChatGPT goes to Wharton

January 24, 2023

Can ChatGPT run a business?  Color me very skeptical.

ChatGPT has now successfully passed a Wharton MBA exam. Sure, this isn’t the hardest problem, but to execute it in 1 second is the breakthrough.— Aaron Levie (@levie) January 22, 2023This is a shockingly easy question, but I would not have predicted that ChatGPT would get it right, given its limited ability to do math and think logically.  So, I am updating my assessment of ChatGPT (slightly) in a favorable direction.

Still, before we get too excited, it helps to contextualize this a bit.

Suppose you are a newly hired executive or strategy consultant.  You are trying to figure out how to add value.  Identifying the bottleneck in a production process might be a

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Trump and the debt ceiling

January 20, 2023

According to Politico, Trump is against cutting Social Security and Medicare:

Former President Donald Trump issued a warning to Republican lawmakers on Friday: Don’t lay a finger on entitlement programs as part of the debt ceiling showdown with the White House.

“Under no circumstances should Republicans vote to cut a single penny from Medicare or Social Security,” Trump said in a video message.

. . .

Nevertheless, in issuing his statement now, Trump places his fellow Republicans in a political corner. Several of them have openly discussed using using the looming debt ceiling standoff to extract cuts in non-discretionary spending, though party leadership has not fully embraced such a demand.

This does indeed put Republicans in a

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Democratic politics and the multiple audience problem:  the case of Ukraine

January 15, 2023

One reason politics is so hard is that our words are often heard by different audiences, and a message that is well-calibrated for one type of listener may work poorly for listeners with different roles, values, or interests.

To illustrate:  Phillips O’Brien has a piece in the Atlantic with the headline “Time is on Ukraine’s side, not Russia’s”.  He did not choose the headline, but this morning he defends it.  He argues that it is important to convey a sense of optimism about the prospects for a Ukrainian victory.  Americans and other western publics will support aid to Ukraine if they feel that Ukraine has a reasonable prospect of winning.  On the flip side, O’Brien notes that pro-Russian propagandists like Tucker Carlson emphasize Russian

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Ukraine updates

January 6, 2023

Ukraine is getting much more advanced offensive weapons . . . This seems to mark a major shift, a commitment to helping Ukraine go on offense and win.  Open questions . . . How far will Ukraine’s partners go?  Infantry fighting vehicles today, maybe tanks, ATACMs, planes, etc. tomorrow?  How big a threat is the Republican controlled House of Representatives?  Will Ukraine be able to avoid a drawn out war of attrition?  Can it launch successful offensives against Russian lines that are shorter and in some cases better fortified than the territory they took in the north?  Will this show of Western resolve make Putin reconsider his commitment to the war?  Why did France, Germany, and the United States decide to provide these weapons now?

A reminder of

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Insanity is doing the same thing over and over and hoping for a different result.  Apparently no one has mentioned this to Republican congressional “leadership”.

January 5, 2023

The Republicans have no good options as they cast around for a solution to their speakership problem.  McCarthy can try to make concessions to secure the support of the Freedom Caucus.  These concessions will empower the obstructionists in the FC and will make the House ungovernable.  The result will be interminable gridlock and recriminations at best and a catastrophic debt default at worse.  We’ve been down this road before.  If Boehner couldn’t manage the FC there’s no reason to think McCarthy can.  Another option for Republicans is to look for an alternative to McCarthy from within the party.  It’s not obvious what problem this solves.  The smart move for the non-FC Republicans might be to seize the high ground of compromise and work with

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Is our AI learning?

December 24, 2022

Tyler Cowen points us to YouChat, a new AI chatbot, that as far as I can see after studying this carefully for 15 seconds is supposed to be more up to date than the OpenAI bot and integrated with a search engine which naturally makes it the next new thing and presumably worth billions of dollars to potential investors.

In the interest of being scrupulously fair, I decided to give YouChat a chance to answer the same question that OpenAI fumbled badly, viz.,

If a three dimensional polygon has nine sides and nine vertices, how many edges does it have?  How do you know?

Here is the reply:

A three-dimensional polygon with nine sides and nine vertices is called a nonagon [1]. A nonagon has 12 edges [1]. The number of edges in a polygon can be

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OpenAI Chat GPT3 meets Euler’s polyhedron formula.  It goes poorly.

December 23, 2022

The new OpenAI chatbot is fun to mess around with.  (You can sign up for a free account here.)  But is it smart?

I asked it an easy math question, based on Euler’s polyhedron formula.  Euler discovered that the number of edges of a polyhedron is equal to the number of faces plus the number of vertices minus 2:  E = F + V – 2.  So, for a cube, the number of faces is 6, the number of vertices or corners is 8, and the number of edges is 12, which is 8 + 6 – 2. 

I asked it the following question:

If a three dimensional polygon has nine sides and nine vertices, how many edges does it have?  How do you know?

You can check that the answer is indeed E = 9 + 9 – 2 = 16 by picturing a cube with a pyramid on top and counting the edges, vertices,

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Jay Bhattacharya’s selective libertarianism:  on COVID and insurance rating

December 22, 2022

A recent paper finds that drivers who are not vaccinated against COVID are substantially more likely to be involved in serious auto accidents than vaccinated drivers.

In response, Jay Bhattacharya, an author of the Great Barrington Declaration and a prominent opponent of lockdowns and vaccine mandates, tweeted that the study “should not be used by automobile insurers as a basis to discriminate against the unvaxxed.”

Well, why not?  One argument Bhattacharya makes is that the “result can’t be interpreted as a causal link between vax status and accident probability” and “Good or bad health could alter monthly premiums, whether any known mechanism links health status to bad driving.”  But many variables used to rate auto insurance are predictive of

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Give Ukraine the weapons it needs to defeat Russia quickly

December 20, 2022

The moral and strategic importance of a Ukrainian victory seems hard to overstate.  A protracted, frozen conflict would be a humanitarian disaster for Ukrainian civilians in Russian occupied areas and war zones, it would lead to continued slaughter of troops on both sides, it would strip Ukraine of critical ports, it would embolden further adventurism by Russia and by China against Taiwan.  An extended war might cause or contribute to a worldwide recession.  Domestically, stalemate and economic stress would damage Biden’s re-election prospects.  Finally, a victory by Russia would damage the confidence of democratic countries and the reputation of liberal democracy around the world, at a time when democracy is very much at risk.  A victory by Ukraine

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Twitter really might implode

December 19, 2022

I have no idea what is going on in Musk’s head, but hoo-boy.  Overpaying, firing essential employees, scaring off advertisers, implementing half-baked policies then quickly reversing himself, provoking regulators.  Now there are indications/rumors he is getting ready to bail. 

And the problem for Musk goes way beyond Twitter.  Tesla’s valuation is insane.  It’s been based on nothing more than Musk’s showmanship for some time.  Despite declining by 50% in the past three months Tesla still has a market cap 5x that of Ford and GM together.  Immolating his reputation by mishandling Twitter will only hasten the inevitable fall to earth.

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What exactly is the libertarian position on access to health care, anyway?  And can we please knock off the Road to Serfdom crap? It’s dangerous.

December 19, 2022

Nature recently published a paper on “degrowth”.  Libertarian economist Donald Boudreaux immediately attacked the paper with his usual collection of pro-market, anti-government arguments.  Fine.  But then Boudreaux published a letter he got from Daniele Struppa, president of Chapman University.  Here is a brief excerpt:

It is just a manifesto for a deindustrialization of the west, filled with naïve and simplistic comments. For example “it is necessary to ensure universal access to high-quality health care”. Nobody disagrees, but do they realize that such health care requires expensive doctors, expensive medications, expensive machinery (MRI, CAT, etc.)?

Nobody disagrees?  I’m pretty sure Boudreaux disagrees.  I haven’t read everything he’s

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Consumption taxes and inflation

December 15, 2022

In a recent post, Matt Yglesias argues for using fiscal policy – tax increases or benefits cuts – to control inflation, rather than relying on interest rate hikes.  There is certainly an argument to be made here, but his suggestions for reducing consumption seem less than ideal.

Yglesias floats the idea of limiting Social Security inflation adjustments for retirees with higher incomes.  He also mentions capping deductions, and cutting Medicare reimbursement rates to drain dollars out of the pockets of medical providers. 

A similar but perhaps more promising idea is to implement a temporary, progressive consumption tax.  To fix ideas, we might put a temporary 5% tax on all consumption expenditures over $5,000 per month.  In practice, that would

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Trump is far more dangerous than many believe

December 9, 2022

Some people believe that a DeSantis presidency would be a bigger threat to democracy than a second Trump presidency.  The thought is that DeSantis is just as authoritarian as Trump, but more competent. 

I agree that DeSantis appears to be a dangerous authoritarian and he might well be more effective than Trump at undermining democratic control.  However, there are reasons to think that a second Trump presidency would be more dangerous than a DeSantis presidency, for reasons having to do with character traits other than authoritarianism.

Trump is impulsive, self-involved, corrupt and dishonest, undisciplined, and intellectually lazy.  He surrounds himself with people who tell him what he wants to hear.  These traits will make it more difficult

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Voters to Fed Chair:  back off, bro

November 17, 2022

How hard should the Fed hit the brakes to bring inflation down?  The answer to this question depends, in part, on just how damaging you think inflation is.  And one reason to think that inflation is harmful is simply that most people – normal people, not CEOs or financiers – seem to really dislike it.  If most people think steady inflation of 8% is worse than steady inflation of 2%, that is, in fact, a (non-dispositive) reason to think that 2% inflation is better than 8% inflation. 

The United States has been, in general, a hard money country.  This is generally speaking a good thing.  Sure, it can go too far – inflation phobia can hurt employment and wages, and there are smart people who think the Fed’s 2% inflation target is too low – but having

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Trump, the MAGA base, and election denialism

November 15, 2022

It has been widely noted that Trumpy Republicans have largely accepted vote tallies and conceded defeat.  There have been few strong claims of fraud or election theft by major candidates (the main exception so far appears to be Kari Lake), and no efforts that I am aware of to mobilize protests against the election results, much less violent protest.

So that raises the question we have been grappling with for 6 years now:  to what extent is Trump sui generis?  Does his charisma (yes, he has charisma) and connection to the MAGA base give him the power to mobilize anti-democratic violence and election denialism, a power that most of his potential MAGA replacements lack? 

Can you see MAGAs storming the Capitol for DeSantis or Cruz or Haley or

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Trump, Musk, Putin, and the power of spite

November 14, 2022

Three different people, same crappy emotion?

Trump has been an electoral liability for the Republican party for at least the last 3 elections, and possibly 4 (depending on what you think would have happened in 2016 without Trump).  So far, his power over MAGA voters and his spitefulness – his evident willingness to tear down Republicans who show disloyalty – has kept Republican elites largely in line. 

But some Republicans are beginning to argue that he is bad for the party and should not be the 2024 nominee.  The challenge for the party – and for DeSantis – is that Trump may well decide to take the party down with him if he does not win the 2024 nomination.  This could involve badmouthing the Republican nominee, or even mounting a third-party

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Why did the Democrats overperform relative to the fundamentals?

November 9, 2022

As I write this it is still possible the Democrats will lose control of Congress, with all that entails, but the Democrats did outperform the fundamentals, and it is useful to think about why.  Here is my quick list of possible explanations:

Increased partisanship and decreased cross-over voting (see here).

Inflation may not be as much of an economic negative as a lot of commentary suggests; maybe unemployment matters more.

Voters may be better at separating disappointment with Biden from support for Republicans than retrospective voting models assume.  It’s not just “throw the bums out” if the other party doesn’t look so hot.

Voters may be better at understanding what politicians are responsible for than retrospective voting theory

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An election pre-mortem

November 8, 2022

According to political scientist John Sides, the fundamentals suggest that Democrats should expect to lose 1 to 3 Senate seats and 40 to 45 House seats.  Going into the election today, polls suggest that the Democrats are likely to lose the House and possibly the Senate, but not by as much as one might expect given economic conditions. 

Suppose that Democrats substantially beat the fundamentals even if they lose control of Congress.  What lessons should they draw from this?

Recriminations would no doubt be the order of the day, but some optimistic souls might be tempted to conclude that the party is basically on the right track because it outperformed relative to economic conditions.  Voters may be disappointed with the state of the country, but

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Canvassing in MI and NC

November 7, 2022

This year I canvassed in MI before the primary and in NC last week.  I don’t like canvassing, it’s boring and tiring, but you do meet some interesting people and see things you would not otherwise see.  A few observations.

Many people seem to be *deeply* isolated.  One woman said she could not open the door.  I wasn’t sure if she was disabled or scared.  A lot of people do not have doorbells, or their doorbells are broken.  That shocked and saddened me.  It sure didn’t seem like they have lots of friends coming over and people just bang on the door to get in.

In many places you could see McMansions and some pretty grim houses and apartments a few blocks apart. 

I met a fair number of black voters who were either Trump curious or so angry at

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The empty moralism of the anti-war left

November 3, 2022

Joe Ciricione joined Briahna Joy Gray on her podcast to discuss the war in Ukraine and the Congressional Progressive Caucus letter calling for negotiations between the United States and Russia.  The podcast is subscribers only, but a clip and follow up talk by BJG are available on line. 

BJG is a talented debater, but her arguments against support for Ukraine are an absurd, moralistic mess.  My rough transcript from the clip above:

There are gangs that have overtaken Haiti, there are the cholera pandemic that was started by the U.N., UN members raped Haitians, a third of Pakistan was underwater due to climate crisis, should we go to invade China because Uigurs are in concentration camps? . . .

Until you can articulate to me what the

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Donald Boudreaux pushes junk science on vaccines

October 28, 2022

Because Hayek would, right?

I have previously discussed Donald Boudreaux’s penchant for encouraging vaccine hesitancy (see here, here, here).  This is disgraceful, it kills people.

But he’s at it again.  This time he uncritically quotes a Wall Street Journal op-ed by the crank Surgeon General of Florida, Joseph A. Ladapo, arguing that young men should not be vaccinated against COVID.  (Boudreaux’s headline states that Ladapo is opposed to boosters for young men, which shows how carefully he read the article before amplifying it; Ladapo is opposed to vaccination.)

Look, there is a concern about myocarditis following mRNA vaccination of young men.  We can (and should) try to evaluate that risk and compare it to the risk of getting COVID without

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The Congressional Progressive Caucus and Ukraine

October 26, 2022

Yesterday I suggested that the CPC letter calling for Biden to negotiate with Putin was a mistake, and that it was at least partly motivated by a desire to strike a pose for the “utopian blame-America-first segment of the democratic base.”

Events have moved quickly since then.  Rep. Jayapal, the head of the CPC, withdrew the letter.  She said it had been drafted over the summer and then released by staff without being properly vetted.  She apologized for the timing of the letter – it created the impression that Democrats are divided on Ukraine and that some progressives are aligned with the McCarthy faction of the Republican party that wants to cut off aid to Ukraine.  But she defended the substance of the letter, by stating that “every war ends

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How does the war in Ukraine end?

October 25, 2022

Thinking about the election is depressing and anxiety provoking, so let’s focus on situation in Ukraine.

Progressive Democrats ask Biden to negotiate with Putin

This letter to Biden from some members of the progressive caucus is a big mistake, assuming the progressives want to save lives and prevent a genocidal Russian takeover of Ukraine.  Putin is losing his war and may lose his grip on power and his life; his strategy is to drag the war out and hope that a cold winter in Europe and (especially) a Republican victory in the United States mid-term election reduces support for Ukraine while he rebuilds his battered army.  He is also trying to deter weapons deliveries to Ukraine by threatening nuclear escalation. 

If Putin wanted to negotiate

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Congressional stock trading

October 20, 2022

I haven’t paid a lot of attention to the controversy surrounding Congressional stock trading, but 1) I assume it’s a real problem and 2) it’s obviously going to be very difficult to get a strong reform bill through Congress. 

So here’s a proposal:  why not craft a strong bill – bright line rules, no exceptions – that will take effect in 10 years?  Of course, it would be best to enact a strong bill today, but given the difficulties involved, why not let today’s members of Congress impose rules on future lawmakers rather than on themselves?

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Manipulating narcissists

October 20, 2022

Great insight:

Putin continues to demonstrate just how easy it is to manipulate narcissists.— Julia Ioffe (@juliaioffe) October 19, 2022Who else can we add to the list?  Trump, Musk.  Anyone else?

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Ezra Klein on Biden leading from behind

October 19, 2022

I’m ambivalent about this Ezra Klein piece:

Trump’s efforts to stay in the news, however, are matched by Biden’s efforts to stay out of it. Biden gives startlingly few interviews and news conferences. He doesn’t go for attention-grabbing stunts or high-engagement tweets. I am not always certain if this is strategy or necessity: It’s not obvious to me that the Biden team trusts him to turn one-on-one conversations and news conferences to his advantage. But perhaps the difference is academic: A good strategy is sometimes born of an unwanted reality.Biden simply doesn’t take up much room in the political discourse. He is a far less central, compelling, and controversial figure than Trump or Obama or Bush were before him. He’s gotten a surprising

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