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Three Things I Think I Think – Not Nice

Here are some things I think I am thinking about:

1) Class warfare – Nice or Not so Nice? Here’s a California Assemblywoman telling Elon Musk to “f$ck” off earlier this year:

And here’s Elon Musk f$cking off right over to Texas by moving both the Tesla HQ to Texas as well as his new state of residency.

I really don’t understand this class warfare thing. I know that inequality is a problem and I can understand the sentiment that the wealthy should pay higher taxes. But I really don’t understand the personal demonization that goes on around a lot of this discussion. You can believe in higher taxes for the wealthy and also believe that the wealthy contribute a huge amount to the economy. You don’t have to believe in higher taxes for the wealthy and also believe rich people are evil monsters. But some people go out of their way to frame the inequality problem as a function of some evildoing and systematic manipulation. In that framing the rich aren’t just richer. They’re richer because they’re evil and gained all this wealth through unfair means. Maybe there’s a shred of truth there, but it isn’t all a function of some evildoing.

Anyhow I know this sort of rhetoric scores political points so that’s mainly why see it. But we should all understand that California is now worse off because of it. The CA budget is highly dependent on capital gains from wealthy people and capital gains are extremely volatile. If CA loses this source of revenue over time because we push all the wealthy out then that’s that much less revenue we have and that much less public spending we can implement. The rich don’t make the economy worse off. They contribute an important base of wealth and income that we can then leverage into public purpose. This is a good thing! Not something to be demonized.

More importantly, why is it so hard to be nice?

2) COVID Stimulus – Nice or Not so Nice? I asked Twitter what they thought of the results of the COVID stimulus. In essence, we made a huge recession disappear in an instant by spending trillions that boosted demand and contributed to higher inflation. So, inflation is higher, but we avoided a potentially horrific downturn during the health crisis. Was it worth it?

My personal view is somewhat nuanced. I argued that the initial stimulus was necessary at the time because we had no idea how bad this thing might get. And I predicted the higher inflation that came with it. In my view, the trade off was worth the potential risks. In March of 2020 it looked like this might be Spanish Flu 2.0. That would have been awful and we should have waged economic war against that. But the later iterations of the shutdowns and stimulus were too much in my opinion.

Twitter had a pretty balanced view on it. About half the responses were in favor and half against. I respect both sides of the argument and it was nice seeing both arguments.

3) Employment Report – Nice or Not so Nice? The US economy added 194K jobs last month. This was well below estimates of 475K. This looks bad at first glance, but last month’s figure was revised higher by 50% to 366K. So, we said the same thing last month and now we know that last month’s data was much better than we thought. To be honest, I hate looking at monthly employment data because it’s so volatile and gets revised so much. So, the media might make this sound worse than it is, but the recovery is full steam ahead.