At least five interesting things for the middle of your week (#11)

"Bullshit jobs", racial depolarization, the YIMBY-union alliance, China's last boosters, Biden's foreign policy, low-carbon steel, and Javier Milei

Source: The White House

I don’t generally like doing two paywalled posts in a row, so this week’s “five interesting things” is free!

Anyway, first up, podcast. This week’s episode of Econ 102 with Erik Torenberg was pretty fun, a lot of it was about intergenerational economics, Millennials vs. Boomers, etc. I also had a fun rant about why smart people are more likely to get depressed. Anyway you can get the episode on Spotify:

Or you can get it on Apple or YouTube, or use this link to subscribe to the whole podcast.

I also have another episode of Hexapodia with Brad DeLong, in which we discuss the battle of David Dayen and the Prospect writers vs. Ezra Klein and the supply-side progressives!

PODCAST: Hexapodia LI: Begun, Þe Attack on Biden Industrial Policy Has!

Anyway, on to this week’s At Least Five Interesting Things, which this week number more than five.

1. The “bullshit jobs” idea isn’t helpful

It’s important to remember that many (most?) of the stories you read on Reddit are either partially or completely made up. But if you browse forums like r/LateStageCapitalism or r/antiwork, you’ll find a lot of young people expressing sentiments like the following:

Now, waitressing and doing an internship is a lot of work, I do agree. But the idea that writing a blog post about federal funding is so soul-crushing and useless that it merits sobbing at your laptop is…well, honestly, it’s a little surprising. That’s the kind of job a lot of people in the past would have salivated over. It’s physically undemanding, it has some room for creativity, it’s politically relevant, and it can be done independently from your laptop without a boss breathing down your neck. It sounds like a Boomer’s dream job.

It’s also…umm…it’s also very similar to my job.

But the rejection of everyday jobs as insufficiently meaningful is fairly common on the political left, at least in the U.S. It was the thesis of the book Bullshit Jobs, by the late David Graeber, which is an expansion of a 2013 essay. Some excerpts from that essay:

[T]echnology has been marshaled, if anything, to figure out ways to make us all work more. In order to achieve this, jobs have had to be created that are, effectively, pointless. Huge swathes of people, in Europe and North America in particular, spend their entire working lives performing tasks they secretly believe do not really need to be performed. The moral and spiritual damage that comes from this situation is profound. It is a scar across our collective soul.

Now, this could have been an interesting thesis about how in a world of increasing specialization and increasingly complex supply chains, workers are alienated not just from the products of their labor but from the consumers who actually benefit from that labor. But it wasn’t. Instead it was just sort of a rant. Graeber doesn’t really provide a convincing explanation of why corporations would want to hire people to do useless work, since hiring people requires paying them money. Corporations generally don’t like giving people money for no reason. Also, many of the jobs that Graeber casually dismisses as “useless” — corporate law, human resources, dog washing, pizza delivery — have obvious and concrete benefits.

In fact, Graeber’s only justification is that people he personally knows often feel disillusioned with their jobs; his argument that we are hiring too many corporate lawyers and too few poet-musicians seems to be nothing more than the fact that the people he knows would rather be poet-musicians. Well, I’m sure lots of people would probably rather get paid to sit around and play Call of Duty all day, but that doesn’t mean it’s more useful than corporate law.

So really, Graeber just completely failed to make a case for his thesis. And honestly it’s also a little sad to see leftists, who once venerated work, pivoting their ideology to being against nearly all forms of it.

But anyway, it’s also the case that the young leftist types who hate their jobs are increasingly in the minority in America. The Conference Board does a very detailed running survey of job satisfaction in the U.S., and although satisfaction was indeed low at the time Graeber wrote his essay, it has since recovered strongly, and is now higher than it’s been at any point since the survey began back in 1987:

Source: Conference Board

The fact that a small number of educated leftists still think their jobs (or most jobs) are pointless drudgery invented by a malevolent capitalist system seems more like a function of elite overproduction than of any inherent deficiency in said system. Yes, a few college graduates from upper-middle-class educated (mostly White) backgrounds will feel that they’re entitled them to a more exalted place in the American social hierarchy than their current jobs entail. But there’s not much we can do about that at the policy level, other than keep trying to raise wages and maintain high employment in general.

2. Racial demographics are not political destiny

The single most poisonous idea in American politics is that racial groups vote as unified blocs. People often use phrases like “Hispanics vote for the Democrats” as a shorthand for the fact that around 60-65% of Hispanic people have tended to vote for the Dems in recent years, but framing things this way encourages people to think of the American people as comprised of mutually opposing homogeneous racial blocs. That’s a very unhelpful and dangerous way to think about our country and our democracy. A diverse society cannot succeed if it conceives of itself as a perpetual struggle between races.

So it’s great to see people in the media talking about how Americans of all races are individuals capable of making their own choices about which party and which ideology to follow. The reason people are (finally) talking about this is racial depolarization — since 2020, white Americans have drifted a bit towards the Dems, while others have drifted a bit toward the Republicans. Here’s Eric Levitz writing in New York Magazine:

In a new analysis of survey data, the New York Times maps the contours of the contemporary Republican electorate…The survey suggests that nonwhite, working-class Americans are starting to vote more like their [white] peers. In 2020, nonwhite, non-college-educated voters backed Joe Biden over Trump by a 48-point margin. Today, this group backs by Biden by merely 16 points, according to the survey. This erosion in the Democrats’ support among nonwhite voters leaves Biden and Trump tied at 43 percent nationally…

The realignment of some nonwhite voters appears to be partially driven by self-identified conservatives cutting ties with the party of their parents in favor of the one best aligned with their social views…Historically, the Democratic Party has relied on the support of Hispanic and (especially) Black voters who lean right on most policy questions but whose racial identities and familial attachments have tethered them to blue America. In 2020, Democrats bled many such voters, as Trump won over right-leaning Latinos. The Times survey suggests a continuation of this trend…

More surprisingly, the poll suggests that Republicans are winning a non-negligible percentage of young, nonwhite voters with left-of-center views on public policy. According to the Times’s Nate Cohn, eight percent of Republican voters are “newcomers,” a subset characterized by moderate-to-liberal views on economics, immigration, race, and social issues. Only about 60 percent of this group is white, and a quarter are younger than 30.

Now, on one hand, I really don’t want to see Republicans win elections, especially if it means bringing back Donald Trump. That would be very very bad. Fortunately, the drift of white blue-collar Midwesterners back toward the Dems is partially canceling out the drift of nonwhite voters to the GOP.

But what I’m happy about is that racial depolarization is prompting us to move away from thinking of American politics as a race war. We’re individuals who can and do make up our own minds about political issues, and if it takes some Hispanic and Asian folks voting for Republicans to make us remember that, well, I’m sorry it had to happen that way, but so be it. Progressives need to realize that racial demographics are not political destiny. The notion that Hispanic and Asian Americans would always be a safe Democratic constituency was always rooted in the notion that the children and grandchildren of immigrants never become mainstream, average, normal Americans. And that idea was always wrong.

3. YIMBYs and unions team up in California!

In a post two weeks ago, I argued that unions have the potential to be part of the solution when it comes to getting America building stuff again. Over at Vox, Rachel M. Cohen has a great story about how in California, unions are being a crucial part of the solution to the housing shortage. Basically, a bunch of unions have allied with the YIMBY movement and helped YIMBYs to push a bunch of pro-housing bills through the state legislature. Cohen writes:

[A] major sea change is happening across California, with some unions now either actively supporting the major housing bills winding their way through the legislature, or otherwise signaling that they’ll no longer fight them. This shift in pro-construction, “Yes in My Backyard” (or YIMBY) politics has been dramatic, and one that hardly anyone foresaw just three years ago.

Cohen then proceeds to narrate the story of how the shift happened. Basically, California construction unions used to oppose new construction, because building a large volume of housing would require hiring some nonunion labor in addition to union labor. The unions thus adhered to the David Dayen doctrine that hoarding institutional power is preferable to getting things built.

But then three things happened. First, a series of leadership changes at various California unions brought in new leaders who realized that their unions would be strengthened, rather than weakened, by expansion of construction. Second, a new crop of YIMBY politicians, including Scott Wiener, managed to insert pro-union provisions into pro-housing bills, in a way that made new construction feel like more of an opportunity for labor than a threat. And third, non-construction unions realized that their workers needed cheap housing very badly.

Together the unions and YIMBYs teamed up on a bill to reform CEQA, California’s even-more-restrictive local version of NEPA, the law that allows NIMBYs to sue to force developers to complete very long and costly procedural reviews before any project can proceed. Some progressives have argued that preserving laws like NEPA and CEQA is essential to maintaining a progressive political coalition. The California unions are proving them wrong.

Now, as Cohen points out, whether this new alliance actually bears fruit, for either the unions or the YIMBYs, depends on how much housing actually gets built as a result of the new legislation. That will depend on how well the legislation was crafted, how much the YIMBY-union alliance follows up with new bills to defeat whatever new barriers NIMBYs manage to erect, and how aggressively cities get sued when they refuse to comply with the new laws.

But whether it succeeds or fails, the alliance between unions and YIMBYs demonstrates that unions are among America’s most pragmatic, results-oriented interest groups. There is nothing ideological that prevents them from supporting an abundance agenda. As long as the supporters of the abundance agenda can make sure that the unions know they won’t be left behind, unions can and will be on board. And if the movement succeeds — if we actually do build a lot more housing, energy, etc. — then it could lead to a healthy revival of union power in the United States.

4. The last China bulls (and why they’re wrong)

Thanks to China’s real estate crash, the conventional wisdom on that country’s economy has whipsawed very quickly from “unstoppable juggernaut” to “basket case”. Of course both narratives are overdone. But just like the China bears in the 2000s, the people who insist on maintaining a bullish outlook now are overstating their case.

One example is the Peterson Institute’s Nicholas Lardy. In an August 17 article entitled “How serious is China’s slowdown?”, he argues that “a careful reading of the present situation does not support the view that China's growth is now gripped by a severe cyclical downward spiral that will persist for several years.” He writes:

China's imports have…weakened, slumping 7.6 percent in the first seven months of 2023, potentially signaling weak domestic demand. But the "decline in nominal import growth was entirely driven by price effects."⁴ In volume terms imports expanded by 1.0 percent compared with a decline of 6.4 percent in the same period last year. Thus, imports in the first half of 2023 are signaling increasing domestic demand.

This is not convincing at all. First of all, those “price effects” he talks about are from two things: A) a weaker Chinese currency, and B) Chinese exporters being forced to cut prices. The first of these signals a lack of global confidence in the Chinese macroeconomy — people think there will be a slowdown and rate cuts, so they’re not as eager to put their money in yuan. The second signals reduced demand for Chinese products, possibly as a result of reshoring or other factors; this isn’t being caused by China’s real estate bust, but it’s another headwind China will have to face. So yes, exports falling because of price effects are bad news for China.

Lardy then writes:

In urban areas…the growth of consumption expenditure was almost ten times as rapid, also compared with the same period in 2022. These data strongly suggest that the saving rate of urban households is now falling.

This hypothesis is confirmed in the aggregate national data for the first half of 2023, when per capita consumption expanded by 8.4 percent, half again as fast as the growth of GDP, both measured in current prices, and easily exceeding the 6.5 percent growth of per capita disposable income. That suggests a turning point during the first half of 2023, leading to a reduction of the household saving rate and increased consumption spending.

There are two big problems with this analysis. First, although in other sections Lardy is careful to take Zero Covid into account when comparing 2023 to 2022, here he doesn’t. The optimistic numbers he quotes in this passage are all compared to the severe slowdown induced by Zero Covid last year. In later sections of his post, he also compares wages and consumer prices to 2022, again neglecting to take Zero Covid into account. This weakens his argument dramatically.

Second, in this section and later sections he talks about the first half of 2023 instead of the second quarter, which is very important; it was Q1 that contained the big bounceback from Zero Covid, while Q2 saw the start of the real estate-induced recession.

In other words, Lardy’s article is mostly just telling us that China bounced back a bit from Zero Covid in the first quarter of 2023. That’s not news, and it’s not a good reason to be optimistic about China’s prospects for the rest of this year.

Another over-optimistic analyst is the perma-bull Glenn Luk, who argues that China’s real estate industry will recover because the country’s urbanization is not yet complete. He cites China’s official urbanization rate of 65%, which is much less than the U.S.’ official rate of 83%. The problem, as I pointed out to him, is that this is not an apples-to-apples comparison; China’s government counts many very built-up densely populated areas as “rural”, while the U.S. counts many sprawling low-density exurbs as “urban”.

A much better data source for international comparisons is the EU’s Global Human Settlement Layer, which measures urbanization based on satellite photos. According to this objective data, China was only 22.5% rural all the way back in 2015, compared to 28% in the U.S. and 30.4% in Germany. It’s true that Japan and Korea were and are even less rural than China, but there are geographic reasons to think that China will never reach Japanese or Korean levels of urban concentration (Japan and Korea are mostly mountains, while eastern China is plain and rolling hills).

China’s cities have also taken steps to keep poor rural workers out, and the population is falling overall. So there’s good reason to think China’s urbanization is mostly complete, and the country’s massively bloated real estate sector will not be bailed out by another big migration to the cities.

5. Biden is good at this foreign policy thing

As regular Noahpinion readers know, I occasionally write about foreign policy. I’m a bit reluctant to do this, since it’s not my area of expertise, but so many people who are also not experts tend to weigh in to the public discussion with their (often terrible) foreign policy takes that I feel compelled to put my hopefully somewhat-less-terrible takes out there as well.

In the early days of this blog, I wrote a post about how I thought the U.S. could fix its foreign policy after the disasters of the War on Terror years:

How to fix U.S. foreign policy

My basic suggestions were A) pivot from the Middle East to Asia, B) focus on helping countries defend themselves against aggression instead of on trying to intervene and change other countries, and C) focus on building durable alliances and partnerships instead of “coalitions of the willing”.

Two and a half years later, I’m amazed that A) the Biden administration has done all of these things, and B) they’re working out even better than I had hoped.

Biden decisively pivoted out of the greater Middle East and ended the War on Terror with the Afghanistan withdrawal. Many attacked this withdrawal as a “humiliation” — as if keeping our troops there to effectively babysit the country for all eternity would have been some sort of source of pride. The U.S. was successful in its objectives for that war, killing Bin Laden, successfully destroying al Qaeda as a global threat and punishing the leaders who had helped the 9/11 perpetrators. The withdrawal was done in good order without a single loss to the Taliban (ISIS, which is currently fighting against the Taliban, did kill some Americans in a single suicide bombing attack). In any case, the end of the Forever Wars was a clear and unambiguous foreign policy success.

Biden then focused on defense and on alliances in the Ukraine War. Ukraine still exists as a country because of Biden’s hasty and vigorous aid. Europe is more united than it has been in the region’s entire history, which is unlikely to have happened had Putin overrun Ukraine in weeks as he had planned. The U.S.’ moral standing has been raised, and Russia’s military might has been degraded to the point where it no longer poses nearly as big of a threat to NATO.

Now the U.S. is focusing on a similar strategy in Asia, the world’s most important region. Instead of throwing our weight around, we’re using our power to help shore up the territorial integrity of Taiwan, the Philippines, and India. We’re also steadily building a web of defensive partnerships and alliances (beyond those that Asian countries are already building for themselves).

The most spectacular success of the alliance-building approach came this week, when Biden hosted a meeting at Camp David between the leaders of South Korea and Japan. Remember that these are two countries that have a deep tradition of enmity over colonization, with relations between the two reaching open hostility in the late 2000s and early 2010s. But as with France/Germany and Greece/Turkey in Cold War 1, a combination of an overwhelming external threat and calm U.S. diplomacy has helped the two countries set aside their various grievances and come together in a relationship that looks a lot like a mutual alliance. Here are some especially encouraging details of the historic agreement:

The three leaders signed a “Commitment to Consult” to coordinate responses to “regional challenges, provocations, and threats affecting our collective interests and security.” This is far from a pact to defend each other in the event of an attack, but it is almost certain to rile China…

The agreement to launch a pilot program on early warning systems for supply chain shortages will help in de-risking exposure to China…

The commitment to make the summit an annual event is likely reassure all three sides the various pledges will remain in place.

And the Korea-Japan-U.S. agreement is just one part of a broader web of quasi-alliances taking shape to balance Chinese expansionism. Recently, Korea joined with India, the U.S., and European countries to support the Philippines’ claim in the South China Sea, which is under pressure from China. And next month Biden will travel to Vietnam, where he will reportedly sign a strategic partnership agreement with that country, aimed at countering China.

It’s getting harder and harder to avoid the conclusion that Biden and his administration are just really good at this.

6. Technological solutions for steel decarbonization

In one of the first posts on this blog, I issued a rebuke to the people who claim that technological solutions never solve big problems:

[C]onsider what happened with COVID. Our leaders failed to fight the virus effectively…Culturally, we screeched our heads off…We became one of the planet’s worst-hit countries, despite having the planet’s most expensive health care system. We died in the red states, we died in the blue states. We died in droves, in hundreds of thousands. Collectively, as a society, we wrung our hands and ran in circles and screeched and died and screeched and died and screeched and died until scientists made vaccines against the virus.

So I guess what I’m saying is, sometimes technological solutionism has its merits.

That post was actually not about Covid, it was about climate change, and how new technologies (solar, batteries, etc.) are making it possible for us to decarbonize our economy without reducing the size of the economy or cutting back on consumption.

The “degrowth” people continually push back on this idea. Their arguments consistently come as some variant of “if technology hasn’t solved this climate-related problem before, it never will, thus we need degrowth”. They like to point to sectors of the economy that will be harder to decarbonize than electricity and transportation. One of these is steel manufacturing, which accounts for about 11% of global CO2 emissions. Steel uses fossil fuels not just for heat, but for actually adding carbon to iron. This makes it hard to find a substitute.

One solution is to use recycled steel for carbon and an electric arc furnace for heat. This won’t decarbonize the whole steel industry, because we can’t subsist on recycling alone, but it’ll make a big difference. This solution used to be speculative, but now it’s rapidly becoming a reality:

The new report from Global Energy Monitor (GEM) shows that 43% of planned steelmaking capacity is now based on electric arc furnace (EAF) technology, while 57% would use coal-based blast furnace-basic oxygen furnaces (BF-BOF)…Over the past year, there has been a notable shift in the proportions of coal-based and lower-carbon forms of planned steelmaking capacity, says GEM…There has been a 68% increase in the number of EAF developments announced over the last year, with 286m tonnes per year (Mtpa) of capacity under development compared with just 170Mtpa a year earlier.

This doesn’t mean that the problem is solved, and we can dust off our hands and say “Mission accomplished” and forget about steel decarbonization. As with many green technologies, this one is being implemented startlingly quickly, but not quickly enough to meet our climate targets. Policy is required to speed it up even more. As is so often the case, politics and technology are complements rather than substitutes — technology enables easier political solutions, and politics makes technological solutions happen faster.

But what it does mean is that if you throw in with the degrowthers and try to point to every existing hard problem as an insoluble one, you’re betting against collective human ingenuity…and that’s never a smart bet.

From the comments:

7. How’s that de-dollarization going?

Commenter Samuel asks me to write about Argentinian presidential candidate Javier Milei, an economist who wants to eliminate the Argentinian central bank and use the dollar as the country’s currency. To many, this represents a demonstration that all the talk about the “death of the dollar” is just hot air. And yes, it is hot air; the dollar isn’t going anywhere, because there’s no alternative global currency that works better than the dollar.

But Milei’s proposal is not a good one; a country needs a central bank, as a lender of last resort, to manage the money supply, and so on. It just needs a central bank that’s more responsible than Argentina’s. Argentina, perhaps more than any other country in the world, is a country with great potential that’s been held back by bad macroeconomic management, with hyperinflation and sovereign default making regular appearances. (This is probably why so many great macroeconomists come from Argentina — they want to help their country, but no one listens to them.)

Milei’s proposal would effectively be the same as a dollar peg, without a central bank to maintain the peg. As soon as the country’s banks experienced a dollar shortage the economy would collapse, because people would have no currency to settle transactions. Instead, what Argentina needs is pretty boring — a free-floating currency, a central bank that doesn’t let inflation get too high, and a fiscal policy that doesn’t simply borrow infinite money and expect the central bank to pay for it. That’s all. Why Argentina can’t politically manage to have these simple things, which most other countries do manage to have, is a great mystery.

(Note: I also got a comment asking me about inflation, but I decided that deserves a full post.)

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