I in principle appreciate the argument in favor of a GND in a depressed economy. I might even support it if I had trust that it would be implemented competently and efficiently. Unfortunately, I have zero trust that the Democratic party can execute a GND responsibly.
First, I no longer trust them when they say that the economy needs stimulus. They pushed for huge deficit spending in 2022, when it was clear that inflation was running high, was not temporary, and that households clearly had excess savings from prior stimulus.
Second, any GND that actually made it through congress would look nothing like the GND laid out by MY. There would for sure be pro-union rules, minority owned business set-asides, attempts to push parental leave policies on the companies involved, community review requirements designed to funnel money to non profit orgs, etc, etc.
Yeah, I find myself doubting that the Democratic Party will ever be the party of stoic technocratic optimization and trickle-down supply side regulatory reform that will lift most boats while capsizing some. This just seems very removed from the party’s DNA.
In some ways it’s almost easier to imagine a future GOP having technocratic Climate as Economic policies than the left ever fully embracing it. Despite all the talk of intersectionality, “cares about climate change” and also “cares about disadvantaged minorities or feminism” or whatever aren’t tied together as a law of nature. Writing pro growth pro business deregulatory legislation that happens to help nuclear or hydro or solar interests instead of coal is a much shorter leap. Ultimately Too many left interest groups will fall back on their deep fear that someone somewhere is profiting.
I suspect the next 4 years are going to disabuse of you this notion.
Given the iron grip Trump has on the party, who knows, maybe GOP takes a wildly new direction once Trump is gone. But yeah, the chances of what you describe happening now is extremely low.
Whatever the GOP was 30 years ago (when under GHWB what describe kind of happened with acid rain) is decidedly NOT the GOP today.
What you’re describing sounds a lot like Bill Clinton’s brand as I remember it? Obama tried to follow Clinton’s lead on trade at least, but was admittedly less successful. Biden is the worst of the three I think, but even he endorsed stuff like permitting reform.
Also, being pro-immigration definitely isn’t about being coldly technocratic for most Democrats, but it is an example of a supply-side reform that raises most boats while capsizing some.
I see what you're saying. The way I would put it is that Democrats care a lot about concentrated, specific harms to the ingroup, but they don't care too much if those harms fall on the outgroup. So it's hard to imagine a general agenda where Dems push pro-growth regulatory reforms because at least some of those policies will hurt members of the ingroup.
1. Was it widely believed during Clinton's time that free trade would have dispersed benefits and concentrated costs?
Even today, I could see Dems supporting such a policy, but they'd have to be convinced that the concentrated costs would fall on the heads of groups they don't care about (e.g., Trumpers in flyover country).
2. I agree with your point about immigration, but I think the key motivating factor is that Democrats tend to care about immigrants a lot more than they care about whoever is hurt by immigration.
Yeah, NAFTA for example had lots of opposition from Rust Belt dems who expected that it would hurt them and their constituents. Clinton just didn’t care, it passed with the votes of the non-Rust Belt dems and Republicans and he signed it because he thought the overall growth benefits were worth it.
The fictionalized version of Clinton in the 1998 film Primary Colors gives a telling-the-hard-truths speech about how trade means that the factories are going to close and they won’t reopen and Rust Belt communities are just going to have to adapt. The real Clinton was too good a politician to ever say anything like that out loud I think, but that was the zeitgeist at the time.
Dems are fine with talking tough to their constituents, usually, I think it’s mostly just Hillary and Biden that were too weak and uncharismatic to pull it off.
There is nothing at all unusual or unique about the Democratic Party this way. The only difference is that at least one faction in the Democratic Party is organized around technocratic optimization, whereas it’s hard to think of any other party like that. (Maybe the UK Lib Dems, or the Singapore ruling party?)
I agree. But isn't this what the "abundance agenda" is, ultimately? I just struggle to understand how Matt/Ezra Klein/Derek Thompson/etc. think we're going to get there.
I disagree -- all that DNA is still there. Democrats routinely introduce half-a-dozen to to a dozen carbon tax / methane fee / cap-and-trade proposals every Congress along the lines MY describes. We suffered through a spasm of Bernie-ism, born of the long slow recovery from 2008, which was exacerbated by too much caution from the technocratic wing of the party. Then all hell broke loose as The Groups took hold during Trump I and were able to hang on during Biden.
I understand where your pessimism comes from. But Democrats have shown a willingness to shift on policy before, so I don't know why one would assume that a preference for leaner bills that remove, rather than add, regulation, couldn't be in the party's future.
It's not like people with influence over the party, like Matt himself, or his ol' buddy Ezra, aren't making that argument, and pointing out ways regulation is choking blue economies even as their GDPs stay high.
If the party can go from Mondale to Clinton to Biden then it's clear that "more of the same" should not be expected from the Democrats any more than it is from Republicans. Which makes sense considering how generally non-ideological their voting base is - they have to chase public opinion while Republicans, with their giant media apparatus, generate it. (It seems like a bad place to be, strategically, but it's where we are.)
(As an example of Republicans creating public opinion go see how crucial immigration was considered as a campaign issue before early 2024, when inflation cooled and Fox began obsessively covering immigration instead. [I will tell you: barely on the radar.] And not only did their viewers follow them on that journey, the legacy media did as well, enthusiastically.)
Where do you live? Because at least in NYC immigration has been a huge issue since well before early 2024. Did you miss the whole Abbott bussing thing?
Stimulus often gets pushed as an alternative to redistribution. Even during a full employment economy, a 40th percentile worker isn’t doing all that well and would benefit from an increase in income. Taking from elites to enrich 40th percentile sum creates losers who have the cultural and political capital to push back. Therefore, it’s easier to just say “we need stimulus.” If you refuse to endorse stimulus, you have to either convince the 40th percentile worker that he can and will benefit from redistribution, convince him that supply side reform will help him or tell him to screw off. Constant stimulus may seem the path of least resistance, the issue is inflation
We never* need "stimulus." Fiscal policy should always have as one of it's components increasing real income and redistributing consumption from where it will do to least to the most good is another. There can be trade offs between the two, but I'm not sure if they change much according to whether the Fed is trying to increase or decrease inflation at any given time.
* Every rule has an exception. In principle, if the Fed were producing more or less inflation than needed to facilitate adjustment to shocks, the NPV rule for expenditures could be modified to get a little more or a little less than NPV>0. This may have been the case in 2009, but I do not think that Congress got spending up to the NPV > 0 level, so the point was moot.
Been to Lake Woebegone lately? There will always be someone in the 40th percentile. Our tax system is already highly redistributive as the top one percent pays 40% of all taxes (per a quick search).
Of course, if you want a highly redistributive tax that does not punish work and investment, then replace the income tax with a land value tax.
My current hypothesis is that the inflation was, indeed, temporary, and fueled by all that excess savings. But, by doing all the deficit spending, they poured fuel on the fire, so instead of inflation dwindling as the savings got spent down, it kept going from all the extra money injected into the economy.
I think it's impossible to say whether it would have been temporary or not because of the counter-factual.
I think more attention needs to be paid to the sense of betrayal articulated. Democrats nominated Biden, specifically as a rejection of leftist Warrenite slush fund slop, and somehow we got 4 years of slop anyway. Democrats could nominate Dick Cheney’s ghost in 2028 and I’d still worry that some nonprofit empty suit will have a voice within the administration to say “yes China has their nukes pointed at us, but would it be equitable to disadvantaged groups if we stopped them from shooting?”
The thing that stands out to me about the GND debate of several years ago isn't the misguided ideas about policy, but rather the misguided ideas about politics.
Dave Roberts wrote about how, sure, a Iot of the climate policies would be unpopular with the public rubes, but that's why the GND also includes a jobs guarantee and M4A. Because of "political economy" is how he put it.
GND proponents not only didn't realize that the economic parts of the plan weren't popular, they thought they'd be so popular that it would make the overall GND an electoral winner.
Has that hypothesis really been tested? A well structured jobs guarantee (which would be a guarantee for people who showed up mostly on time and consistently sober and were generally willing to follow instructions) could be really, really popular. People are bad at predicting their reactions to policy choices. Normies in 1932 were NOT crusading for Keynesian economics. Even in 1936, it’s unlikely the median voter could have explained counter cyclical stimulus. Yet the original new deal was massively popular and basically delivered a generation of Democratic majorities.
Most well structured public benefits end up being popular once people benefit from them. The rub is in getting them passed
Right now they do. Presumably the well-structured federal jobs guarantee would only kick in when unemployment rises, or it would pay just below minimum wage, or something else like that, so that it’s really a countercyclical stimulus.
"Presumably" is doing a lot of work there. That approach would make sense, but I doubt it would be what gets passed. Looking at the nightmare of unemployment insurance implementation, especially during the pandemic, I also suspect that the implementation of more complex processes like creating and assigning jobs to people would end up being a fiasco in the base case.
You can find employment. Will it pay you enough to afford the car that you need to consistently get to that employment on time? Maybe not. (I work with a lot of young people who are sober and reliable to the extent possible given their circumstances).
I suspect that is one of many differences, but, yes, I don't believe a jobs program for such a person would be an effective use of public resources.
We have Medicaid and food stamps today to help someone who chooses not to be on time or follow instructions often enough to be employed. I would support an even more generous (within reason) subsidy for such a person, but setting up a jobs program wouldn't be on my list of supported policies.
I have never seen work without accountability work. The government hires you and tells you to pick up trash on the highway. But if you don't pick up trash on the highway, you still have a guaranteed job. How long do you think people are going to pick up trash on the highway?
In the current economy, I actually have sympathy for your point. And have no doubt that some portion of the people who in the pie chart imbedded would be working "full time" instead of "part time" or maybe wouldn't be on disability if they were more responsible with their own lives.
But I hope this chart shows that a pretty significant portion of Americans who receive benefits like Medicaid are either already working or in a position to receive aid on some sort of merit "retired, a student etc".
In a full employment economy, those people will have jobs too.
However, what we learned this year is that people are supposedly so enraged by a temporary bout of inflation that no politician will ever push for a full employment economy that also includes some inflation ever again.
So in the future progressive economic policy will have to focus on creating band aids, like a federal jobs guarantee, to staunch the bleeding from high interest rates/low fiscal stimulus actions.
Would this be over-learning the lesson? It’s easy to see how people get upset about 10 to 20 percent price increases in salient items like groceries and cars but would a more typical bout of inflation around 5% yoy without even be noticeable if the right wing press didn’t freak out (yes they’re going to freak out so that’s got to be priced in I admit).
Plus shouldn’t the central bank in the absence of major supply disruptions be more effective at keeping it in check?
The New Deal did nothing that investing enough to make NPV of the marginal investment 0. What the New Deal did to (very inadequately) push the economy out of depression was go off gold. But the Fed we had didn't take advantage of breaking the gold link to inflate more.
Second thought, there is something very disturbing about the ideologues who push degrowth. They constantly lie to substantiate their position. They are comfortable with dishonesty, because they tell themselves they are saving the world from disaster. They hold supremely misanthropic views and assert that change/innovation are not possible. This is why they lie about the mass reduction in poverty and rise in average living standards across the world over the past 50 years. They then assert that mass reductions in real output of both goods and services would not negatively affect human welfare. They assert that somehow people will willingly cut their incomes and living standards in half.
This is the same arrogant and self assured mentality that the actual practitioners of Communism held. All forms of human immiseration are acceptable, since they are brining about the prophesied utopia. If these people gain influence and power, they would commit crimes we haven't seen since Mao or Stalin.
What is incredibly strange about degrowthers, and Matt points this out in the piece, is that they have had absolutely no political success with attracting voters and yet they have weasled their way into the Democratic Party and left discourse.
The left should be about getting people out of poverty, and that requires both redistribution and growth.
Is this only a left-wing phenomenon? Nativist, anti-immigration elements on the right are advocating for de-facto degrowth policies, even though they don't identify them that way. Resistance to change, protection of incumbent companies and technologies and patterns of physical development from competition and replacement with superior variants... it's all "anti-growth".
There is a salient difference in acknowledging or even celebrating the fact that your policies will prevent growth, compared to just embracing policies with no thought about growth.
I think this is dramatically mistaken. Much of the appeal of nostalgic times is that's when the US economy was growing dramatically. E.g. the 90s, the 50s-60s.
I agree, but one of the salient differences is that when you describe the results of your policies as the purpose of your policies, it makes it easier to avoid them. Very few people think "de-growth" is a good idea, but lots of people support de-growth policies by another name.
They have been successful in infiltrating the European left. The free ride on environmental groups and propose non-solutions to climate change. They are one reason the salience of climate change policy and the left are becoming less popular with the electorate.
...and just factually wrong about so much. Everything from the dangers and costs of nuclear power to the fact that economic growth per unit of energy and unit of material consumed continues to climb. I was looking at the way Germany's grid has evolved since the Greens-led demand for nuclear decommissioning took hold. While the growth in renewables has been spectacular, hard coal, lignite and natural gas still provide about a third of the total tWhs, but less than the number of tWhs provided by German nuclear as recently as 2010. Germany could have a zero carbon electrical grid today if political consensus had been built around rapidly growing renewables as a complement to existing nuclear rather than as a replacement for it.
One reason for optimism is that once the track record of progress on decarbonization becomes unassailable in the next decade, it will remove much of the rationale for degrowth. Solar will save us from annoying political conversations as well as climate change.
In Europe degrowth may not make sense as policy, but I get why Europeans would dislike growth. Paris and Rome would be much more enjoyable with a tenth the tourists!
They don’t have *no* success with attracting voters. I do think there are a percent or two of voters who buy this stuff, which is a lot more than there were a decade or two ago.
Has anyone figured out how this happened? My hypothesis is that the culprit is European cross pollination. You can see this as well in eg foreign policy, tech policy, etc.
It’s time for American liberals to realize that Europe is the ultimate basket case, not cool and sophisticated, and should never be emulated.
This is precisely why, despite the fact that I'm seriously concerned about climate change/global warming, ocean acidification, etc., I oppose the vast majority of environmental regulations proposed because they are almost always structured in ways that are deliberately harmful to the economy/pro-redistribution in completely unnecessary ways.
Except, of course, for the rather minor change that they think is possible, where we convince the entire human race to stop responding to incentives, and not care about things like earning more money, having more stuff, etc.
I love the point about how cutting red tape on clean power and home building (esp. in blue areas that have cleaner grids and denser cities) can benefit the climate. That’s a winning message.
I'd like to see a true expert, like Jesse Jenkins and the Princeton ZERO Lab, weigh in on the benefits of policies to encourage denser building on carbon emissions. My guess is that, while undoubtedly beneficial, the timeline to change levels of density, especially in SFH neighborhoods being upzoned, is so long as to contribute virtually nothing to meeting the requirement over the next couple decades.
Re: benefits of the various policies. A few years ago researchers at Berkeley had analyzed the various policies/changes that each city in CA could make and its effect on carbon emissions. For the cities I checked in SF Bay Area, after Urban Infill came heating electrification, commercial efficiency, and vehicle mile reduction. For Los Angeles, the top 3 were the same but the order different. Here's the article link, and then also a calculator they put together for you to play with the effects:
Your question about "timeline" is interesting. Yeah the timeline is long to increase the level of density, but I think all of the options are hard for different reasons. These are all really hard to do also! The first two (heating and efficiency) require lots of people to make individual decisions, but also have already been encouraged by legislation such as the BIL and the IRA. The next one (vehicle miles reduction) is also hard without increasing housing density and/or rezoning to integrate commercial and residential areas. Nothing easy, it's all a huge project.
That study that Andrew Ahern linked is so braindead dumb.
Asking people if they want to work fewer hours...almost everyone wants to! But what they won't want is to earn less money as a consequence of working less.
Universal healthcare...yeah, anyone would want that for free if they could get it! But in addition to how it's going to be paid for, who's going to do the labor, especially if you cut down work hours? Only way that's sustainable is if bunch of people all of tbe sudden are going to find their way in the healthcare sector that aren't suited for it.
A ban on ads...everyone finds ads annoying! But people will find ways to get information about products they want. And if not enough other ads can fill in, then people will have to pay money to get what was previously ad supported, which they won't like. Not to mention the First Amendment problems that arise.
That was such a great example of everything bagel nonsense that would never hold up once people's full incentives are accounted for.
I was wondering the other day how much ad spending is actually effective or is it just something that companies think they need to do? Maybe it’s a lottery mentality where you buy a lot of tickets and hope for a big payday — you gotta pay to play kind of thing.
John Wanamaker is reputed to have said over a hundred years ago that he knew that half of the money he spent on advertising was wasted; the trouble was that he didn't know which half. Unlike so many mysteries of the late 19th Century that have yielded up their secrets to inspired study, we don't seem any closer to solving this one, and not for lack of trying.
I'm guessing it depends on the industry--some are very dependent on mass advertising to get the word out to customers as a whole, others are able to run on word of mouth or very targeted campaigns at a narrower, more discrete group of people that are going to be their customers.
I’d love to know if any larger companies have run controlled experiments where they deploy advertising in one geographic market and compare it to another.
Like you say, there are different goals and contexts for advertising which along with the challenge of establishing a control must make it difficult to study in the wild.
Very likely some of the big companies have! But research in these sorts of fields is very much *not* published, because they don’t want competitors to know.
If meaningful results existed, it's hard to believe that they've never been leaked, anywhere. If they had been, they'd be in the curriculum of every MBA program.
All of those CEOs out there would make a ton more money if they could get away with cutting the marketing budget without hurting sales. So I think the baseline assumption has to be that it works, at least as well as things work in general.
Nationalizing Facebook, Google, YouTube, and the streaming services could be a rounding error depending on how you did it. Of course, the lawyers would find a way to make it more expensive.
Yeah, it would probably be interpreted that way by our current justices to punish a liberal government for taking over the platforms. I don’t think there’s anything in 1A intrinsically that gives you a right to a platform, you just have the right to not be prosecuted for speaking or self-publishing your views. But like everything these days it would be subject to interpretation by a political SC
No one has a right to a platform provided by the government, but once the government does provide such a platform, it has to be content neutral and speaker neutral over who's allowed to use it. And because online platforms lack rivalrousness, time, place, and manner restrictions become less viable. Spam is annoying, but it's also very clearly a form of expressive speech. About the only restrictions I could see on it on a public venue would be if it engages in fraudulent behavior.
I dunno, it isn’t a bad thing for healthcare to take up a huge chunk of a rich country. It would be good for America if 90% of Silicon Valley and 90% of Wall Street instead were doctors, nurses, medical researchers, or worked in manufacturing or construction doing *useful* things.
Which basically would hurt whom, Silicon Valley landlords? It’s hard to say that the concentration of wealth in SV really helps, say, the barista in Cupertino that has to live all the way out in Stockton. Thus the traditional arguments for growth are kind of upended by the housing theory of everything.
And many of the products SV sells are largely harmful just anyway by being addictive or disruptive. Same with Wall Street. The best you can say about it is that it probably helps the arts because the money in NYC keeps a thing like Broadway viable in a way that might not be possible elsewhere.
Say what you will about Big Pharma and the explosive growth in healthcare costs, it at least develops products that help people!
What you are proposing is turning Silicon Valley and New York into Detroit, a city where a preeminent American industry that caused numerous negative externalities has contracted, leaving housing stock that is affordable for service workers. This may be a tradeoff that you are comfortable with, but I can bet that it would be a hard sell to the rest of the country.
It would probably be easier to build more housing in Cupertino and better transit to Stockton so that more people can participate in the growth.
You would have to measure the value of the other goods and services created/provided instead. It’s hard to measure the hypothetical value of a lot more healthcare goods and services compared to the real measured value of software and financial goods and services.
But there’s a second point too, which is that the measured value of revenue from software and financial services may not measure the actual quality of life they provide. GDP and wealth are meant to be real measures of quality of life, but they are approximated with the dollar value people pay for them. This means that things like the transition from CDs to streaming music were vastly undercounted in the amount of wealth they created, because consumers were able to bargain the price way down, despite getting more total benefit of music consumption. There are arguments that the value of financial services and software are overestimated by looking at the dollar values they cost (though I’m not sure how strongly to agree with those arguments).
IMO, Matt's assessment of the IRA's cost/benefit math doesn't price two essential benefits it provides.
First, EVs don't just reduce carbon emissions, they also pollute the air a lot less. The same is true for cleaning up the electric grid. Studies vary, but I don't think it's controversial that converting the passenger fleet from gas to electric will save 15k to 20k lives per year.
Second, a big part of the IRA's focus was on increasing the US industrial base in key areas. This dramatically affected how incentives were structured and how much it cost.
Regenerative breaking creates more fine air particulate from tires than with traditional ICEs. That is one downside of BEVs vs ICEs that is being studied. Though that negative effect is probably smaller than the effect of combustion.
I don't think the tire wear problem is just about regenerative breaking. Regenerative breaking reduces particulates from brake pads. The problem is EVs are much heavier than ICE cars and that means more particulates from tire wear from all driving.
The question is whether the reduction in particulates from regenerative braking (and reduced brake pad wear) outweighs the gains in particulates from faster tire wear overall.
Studies I've seen are all over the map on this question and it doesn't' seem to be settled yet.
I thought it was the opposite - fine particulates are created either by brake pads skidding against the brake disc, or by tires skidding against the road. While you’re doing regenerative braking, neither happens - the force is exerted by a magnetic field.
Ah, I see someone else in the thread mentioned this, but the issue is that increased vehicle weight means more tire wear in general. (Which I suppose raises the question of whether tire particulates are more or less bad than metal particulates.)
Will that happen if the subsidies are removed? Maybe; I'm not convinced. The domestic EV industry has not yet reached takeoff. Especially if its core customer base, climate-conscious liberals, abandon Tesla, as is already happening.
IMO, it'll mostly depend on how fast and how far battery prices drop. Most of the analysis I'm seeing predicts price parity within just a couple of years. Time will tell on that of course. It also depends on charging availability and speed, but both the current state of things and the trajectory looks promising.
I believe there are decent EVs on the market today that even without subsidies would result in lower monthly driving costs versus their ICE equivalents. MSRP would be higher, but fuel cost differential would be high enough to more than offset the higher car payment. This obviously depends a lot on location and local gas/electric prices.
Eventually as EV's become the clear choice. But of course slower than some would like.
Note I am ok with some government help to get recharge stations built, but not with all the ridiculous requirements they are attaching to it. I actually want them built.
What would it take to actually educate even slightly more of the public on how economics and policy interventions work?
Most people just don't think about this, and also lack the background knowledge to do so effectively. When I was in high school (2001-2005 in NY) there was essentially no civics education, and even our "AP Economics" course was a joke taught by a history teacher who couldn't do basic middle-school level math. With so little background, so many true statements just... have no clear path to being widely understood or accepted. And to most people, they sound just like a bunch of lies charlatans peddle.
"This specific kind of tax increase will give you more money."
"Nuclear plants release less radiation than coal plants, even if you average in Chernobyl and Fukushima and TMI, even before you count the effects of all the other kinds of emissions."
"Demolishing old enough buildings is often more environmentally friendly than keeping them."
"Building more houses, including expensive ones, will lower average prices elsewhere. 'Affordable housing' requirements that reduce construction overall will do the opposite."
Sometimes I feel like I'm living in a completely different world than a lot of the people around me, and forums like this are what keep me sane.
We live in a world where people complain that nobody ever taught them about the Trail of Tears or how to balance a checkbook. Things that are fully taught at multiple grade levels across the country to anyone willing to listen.
“Sometimes I feel like I'm living in a completely different world than a lot of the people around me, and forums like this are what keep me sane.“
100%. I almost never express my actual views out loud. I’m not a MAGA person at all, and I support strong environmental policies. But they have to at least stand a chance of actually working. I feel that if a lot of my colleagues and other people I know knew my actual views, which I suppose are kind of lowercase “c” conservative at this point (I think of myself as a classical liberal), they would shun me. When I do tiptoe in the direction of expressing said views, people seem to ignore them and keep sending me alarmist info; not sure if they’re trying to convince me I’m wrong or just not getting the message. I’m really grateful for this space but I wish there were more like it IRL.
You have to start when they’re young and not with supply/demand charts. Need to find better entry points like the dating market, collectables maybe and other hooks.
I think you need to mandate passing a basic economics test (and constitutional law test) to graduate from high school.
you need to understand how supply and demand works. You need to understand that price controls cause shortages. You need to understand about tradeoffs and efficiency.
What externalities are, and how and when government action might be appropriate to fix them.
Not the main thrust of this post, but cards on the table here; I think “historic districts” are an absolute plague on this country. Places like north end Boston or French Quarter are the exceptions that prove the rule.
I’ve noted before, my actual degree is in History from the College of William & Mary. I bring this up because I am hardly anti history.
But take a look at “old” neighborhoods or “historic” districts in places not Philadelphia or Boston. I’d encourage you to go on google maps and literally go down to street level and ask yourself “what the heck is historic about this neighborhood or these buildings?”
Excessive environmental review as damaging as they can be in places like CA at least has defensible purpose. I’m not at all in favor of completely scraping. I’m in favor of amending and I suspect Matt is too. To get back to the main thrust of this article, climate change is very real. Protecting clean drinking water or not excessively polluting the air are worthwhile goals. But historic preservation of whole neighborhoods (not just particular sites?). A total scam as far as I’m concerned for wealthier residents to keep people out and protect home values.
It’s actually worse than you describe if you factor in the resources wasted on environmental reviews of “historic” resources such as train tracks, rusted-out bridges, concrete rail overpasses, crumbling buildings filled with hazmat, and so on.
I think focusing on the excessive cases is key, though. Most people are going to instantly think of historic neighborhoods (Church Hill, for example, with give me liberty or give me death) or beautiful thriving neighborhoods that are symbolic of the city, like the Fan District. Most people are NOT going to think of train tracks.
Delisting the former would be rabidly opposed. The latter is going to mostly get questions about what purpose that was supposed to serve in the first place. It’s important to choose those battles carefully.
Most of the historic districts and designated buildings I am familiar with actually are historic, are considered an important part of the local landscape, and are, to put it bluntly, beloved by a whole lot of non-owners.
To give Richmond as an example, since it’s relatively near to where you went to school, you could probably theoretically find something LESS popular than redeveloping the Fan District, Church Hill, or Shockoe Slip with lots of high rises, but it would probably need to be along the lines of large tax increases on the middle class or reinstating the draft to be equally unpopular with locals.
I don’t doubt that there are silly historic designations, and I don’t doubt it has been misused on occasion, but in general historic districts get a lot of support from people who have no direct financial interest in those historic buildings. A generic attack on historic districts, without qualifications, would be wildly unpopular, because the historic districts most people then think of are the ones they love to look at and the ones that give them a sense of place.
Students for Justice in Palestine has a post about the LA fires, saying "climate collapse draws near. The only solution is land back and the complete eradication of US imperialism". I realise SJP is not running policy for the Democrats. But this is an extreme example of an approach that's become widespread on the left of making demands from folks while telling them you oppose their way of life. This is just not an effective persuasion tactic. I can't think of any other major group that does this. If left-wing groups believe in the importance of their policy goals, they should stop doing it.
The whole idea of "decolonization" is really just an repackaging of blood and soil ethnonationalism. Adherents to this ideological framework have difficulty concealing their desire for ethnic cleansing and actual violent genocide of peoples they label "colonizers."
What is a really sick about this specific take by them is that it dehumanizes members of first nations, asserts those people do not want to live in a modern society with modern material benefits, and that they will somehow act as mystical elves to satiate the moral feelings of a bunch of privileged asses living off their parents.
“The whole idea of "decolonization" is really just an repackaging of blood and soil ethnonationalism.”
I’m a political geographer, and your sentence captures very well something that I’ve long had kicking around in my head. There’s a lot of work in indigenous studies that is very literally racist; if there’s a non-indigenous author or collaborator the paper or book or whatever will inevitably contain a lengthy footnote or other statement about how the non-indigenous person is fundamentally and irreparably alienated from the indigenous authors.
I get that there are profound injustices that have been done over decades and centuries, and if I were on the receiving end of them, I wouldn’t accept “oh well, fait accompli and all that. Friends?” as a response. But I also don’t find it acceptable to say “we get to have attitudes that in any other context would be rightly considered blatantly racist, and if you challenge this that’s itself racist and imperialist.”
Anyway, I’ve been working off and on on a paper to this effect, and assuming it gets published I’m pretty scared about possible backlash.
If by #landback, they mean returning to the tradition of some Native Californian tribes to do controlled burns, I'm all for it! Don't think they're aware of that though...
No, they mean the forcible and uncompensated displacement of current inhabitants of LA county. You know, ethnic cleansing of lesser peoples according to their blood and soil mantra.
I'm not sure I'd like to return to the tradition of some Native Californian tribes to do some controlled burns. As I recall, when they were managing the wilderness back in the day, they didn't have to take into account such controlled burns escaping into dense urban environments.
I say hooray for the First Amendment. It gives brain dead groups like SJP the protected right to spout nonsense like this. And the rest of us have the right to ignore their nonsense.
But do some people believe their junk? Sure. But it's not like being pro-Palestine and anti-Israel has swept the American body politic.
lol meanwhile my Facebook wall is full of people incensed that the right would make political hay out of failures in the Dem response “how dare you! Homes are still burning!”
When I first read AOC's Green New Deal propose I was taken aback by how substance-less it was. It was merely a list of sentiments and desires with no real policy or actions attached. Even more disconcerting was the fact there were all these labor and anti-business goals attached to this essay that had no relation to climate change or environmental policies. It made it look like greenwashing of the old school socialist agenda (that is Watermeloning before the pro-Hamas crowd adopted to image.)
It was counterproductive like Medicare for All, and the Just-Us Dem wasted so much public time and attention on something that didn't even contain substantive policy actions.
Dan, we're somewhat distanced from each other on the ideological spectrum but we're in one hundred percent agreement on what a bag of stupidity the GND proposal was.
I *think* AOC has matured since then and wouldn't make the same dumb mistake again. I hope.
Wasn't the original Green New Deal one of those legislative proposals that was not real? Like, it was proposed during an opposing party's administration with everyone knowing it had no chance of passage? I saw it as a Democratic version of the old Paul Ryan Budget.
One intended benefit of the EV subsidies in particular and of the GND in general is promoting American manufacturing of EVs and of everything clean energy related. There are lots of people who want to increase American manufacturing, ranging from Noah Smith worrying about war with China to Bernie Sanders worrying about manufacturing jobs, but this desire is a big part of the background for the Green New Deal.
Among the crippling issues here, is that we've made actually doing this, as opposed to subsidizing it, very, very difficult, and that's just not something the Democrats are able to fix. Almost none of our very large investments in various physical production and physical infrastructure translated into much within Biden's entire 4-year term, and some of it will take decades more at the rate we're releasing the funds and authorizing projects, due to sheer regulatory and permitting bloat that benefits basically only the lawyers and environmental consultants.
Meanwhile, the combined compliance cost for the manufacturing, energy, and construction sectors, which constitute 24% of GDP, is around 8% of GDP, a full third of their output. Even if we posit that compliance is good, which, yes, worker safety, emissions limits, workforce nondiscrimination, all good... we can't spend a third of output on it.
That's well into the realm of pointless make-work grifting, which again benefits only the legal, HR, and consulting professions. The problem is, those exact professions are now all die-hard Democratic voters and donors, among the most reliably blue demographics we have. If the Democrats can't prize their grip from around our throats, and I don't think there's any reason to think we can, we will not be able to preside over a renaissance in American productivity and dynamism in non-knowledge sectors.
I am reduced to hoping the GOP guts everything and we have the sense, when we ride the backlash to try to put humpty back together, to slim him down by a factor of five instead of reconstituting the exact regulatory and legal environment we have today.
Tariffs and subsidies will not paper over the fundamental issues that have made US manufacturing less competitive in world markets.
And since you asked, the single biggest factor is our huge budget deficit, which sets off a number of fiscal and monetary dominoes that essentially enable and finance the trade deficit. We essentially "balance" our trade by exporting debt instead of products.
Meanwhile, keeping out affordable Chinese EVs sends the message that we don't take climate change that seriously.
Life is complicated. Letting BYD sell here would lead to a spurt in EV sales but it's doubtful that that would be sustainable. As it undercut domestic manufacturing, politicians would turn against it and eventually Chinese EVs would be banned, but at the cost of supporting domestic EVs. From a climate point of view, we would be worse off than keeping BYD out from the beginning and subsidizing the domestic industry.
I think we're following exactly the right path here.
I just think it's worth noting that nothing is stopping BYD from competing here. They won the largest bus contract through the LAMTA back in 2017 and have a huge bus factory in California. They just have to play by the same import % vs. total US sales as Toyota, Honda, Kia, etc. have on the auto side.
Given rising tensions between the US and China, if I was a company in one of those countries, I would not be making massive new manufacturing investments in the other country.
Beyond that, I don't think that the Chinese government would allow it. Given economic conditions in China, I think there's going to be a push to move capital out of China that the CCP is going to fight hard against.
Executive Summary: The right thing to do depends on the circumstances.
I’m continually frustrated by how many people, especially politicians, view economic policy as a matter of eternal moral truth. Always cut taxes. Always create jobs. Always subsidize industry.
It's really difficult to know when the circumstances have changed. It's easy to dump on Biden's legislation now as being overstimulating, but the work for those bills started back in 2020 and continued well into 2021. It really wasn't clear during that time that we would be coming out of the Covid recession just fine and fiery, so it would have taken a lot of high level insight to be pushing something for two years and then say "nah, we don't need this after all, we need to do it this way instead."
I consider myself pretty well read, and I'm sure I would not have been convinced. I know there were some, like Jason Furman making that call, but it wasn't universal. Even today, I have seen conflicting analyses about how much of inflation was caused by fiscal policies and how much was supply chain and lingering covid related challenges. So yes, we overstimulated the economy, but the worst result of that not the inflation, but rather losing the election. The trade off to be made in 2022 between possible inflation and possible lower employment wasn't a question for empirical analysis but rather for political, and ethical, decision.
Well said. It's also true that while we don't need more stimulus *now* that might not be the case in, oh, two or three years. In a coming downturn, we might be very happy to have those EV subsidies to stimulate demand.
I recall lots of articles (including here!) about how to shape policy in an era of high inflation. Well, inflation is 2.7% now. Some high inflation.
Democracy works on the marginal 10-20% that can be swayed on an issue. Works a hell of a lot better than praying your dictator is open to changing his mind.
"Left-of-center elites really want to address the problem of climate change"
I guess in some sense the do, but frankly, their actions and policy positions have been so far removed from creating low cost incentives for less net emission of CO2 into the atmosphere that one could doubt it. And some who oppose the policies they do advocate suspect _do_ doubt it.
They suspect that those elites are trying to use "Climate Change" as a way of advancing other goals: de growth or Socialism, or anti-big business-ism or something.
"but working class voters do not want to bear localized economic costs for global benefits"
This attitude is much more widespread that "working class voters." And perversely, this has led those left of center elites to measures that hide the costs from voters with measures that impose _higher_ costs on them. It does not help that those elites do not themselves understand the perversity.
Relative minor point of the overall article, but the EV subsidies are about way more than just climate.
Experts agree that EVs are going to eventually dominate the car market based on price and performance, but the transition between making ICE cars and EVs is very hard. American (and basically all Western) automakers have been struggling with this. It would be bad if all Western automakers (except for Tesla) went out of business and the world was dominated by Chinese automakers. There’s both the jobs/economic aspect, but car manufacturing capacity is crucial for national security. During WW2, those production lines were converted to making Jeeps and tanks and aircraft.
The EV subsidies help American automakers push through the initial phases of EV development/production which are extremely expensive.
Right. I don't think there's a general awareness of how imperiled the entire legacy auto industry is right now due to the success of the Chinese EV industry.
China came out of nowhere and last year built over 30 million of the ~90 million cars sold all across the world. Next year they're supposedly poised to build even more and since domestic demand has crashed, they're going to be dumping those all over the world at highly discounted prices. Next year could really be a bloodbath for legacy auto-makers if anything like that number of cars gets exported by China.
We can probably protect the US from infiltration by Chinese brands, but that's not going to protect the US legacy auto industry. Around 70% of its revenue come from sales outside the US. Obviously, the economic footprint of legacy automakers will shrink dramatically if sales drop by anything close to 70%.
We just saw the fall of Nissan, which would have gone bankrupt if the Japanese government hadn't stepped in and encouraged Honda to take it over. VW could be the next domino to fall. IMO, the picture is really looking pretty grim, particularly for Europe and Japan, but also for the US.
The US legacy automakers export well under 10% of their output from American factories, mostly models which are built at scale here and more niche abroad, like light trucks. In turn they then import similar proportions of their value-add from abroad, most especially Mexico and Canada, but also China and LatAm.
The rest of their output and revenue comes from local factories in markets like Brazil, Argentina, India, and SE Asia, which supply their home markets.
There is almost no world in which Brazil, Argentina, or India are going to permit the relatively fragile green shoots of industrialization that they've achieved to be gutted by Chinese competition. All of Mexico, Brazil, and Chile are already discussing tariffs on manufactures, Argentina's president has made noises to that effect, India, Indonesia, Malaysia, and Vietnam already effectively do so...
As such there is a very good chance that at some point in the next decade China finds itself in the midst of a deflationary crisis similar to the Great Depression, which outcome they have only staved off thus far because they have the escape valve of exports to avoid harmonizing wages and prices at home.
In the medium-term, however, US automakers have handled expansion abroad relatively well; they're widely invested and deal with host countries mainly as partners in which they seek to earn money through local industrial operations, not dumping grounds for vehicles produced in the US. Japan and the EU are more vulnerable because to the nations where they have market share, they are more frequently just "another exporter taking our money." They have foreign manufacturing operations but many of them are knock-down kit assembly.
This is an excellent comment and a bit surprised it gotten more of a response. Aside from the country responses - which as you said will be severe, especially since China has the world's most protected market. What are Toyota, VW, Ford, Honda, and GM going to suddenly stop producing cars? Currently Chinese OEMs have rounds down to zero global market share outside China. One day they might become serious global competitors but currently they are not serious competitors.
If their trade partners were prepared to tolerate them dumping products which have direct domestically-produced competition at below-cost rates thanks to subsidies to the industrial sector which total 10%+ of GDP, then sure, China would be able to compete very effectively with the rest of the world's automakers without basically any supply chains or productive capacity extending outside China. They transfer such a large fraction of national income to producers that it is effectively impossible to compete without subsidizing the hell out of your own champions.
But... the rich world (excepting maybe Australia and Britain, which will get there eventually) has already functionally said "no" to permitting imports of this entire class of products and is slowly inching towards expanding the sectors in which it diversifies supply chains outside of China. Middle-income markets, of which we can take Brazil, Indonesia, and Mexico as emblematic, absolutely will not permit this to happen and are taking similar steps. India doesn't qualify as a middle-income market normally but has a sufficiently large middle class to be in the same realm for overall demand and is taking similar measures.
Which means that for the automotive market, China will be left trying to export vehicles to low-income markets where there is basically no domestic manufacturing about which politicians are concerned. Those are maybe a few percent of global demand.
I expect, over the coming decade or so, to see a lot of the same when it comes to civil aviation, drones, composite materials, basically anything with dual civil-military uses. As the US in particular invests in building capacity for those industries both at home and in friendlier countries than China, those countries (including, I expect, India, much of LatAm, and most of ASEAN) will have an incentive to not just export to the US's walled garden, but also to take their domestic markets back by hook or by crook.
Well said, David. It's possible that China may have screwed the pooch. They trashed their domestic economy by the mother of all real estate bubbles and are trying to get out of the mess by ramping up exports (i.e., counting on the rest of the world to bail them by allowing free importing their products). And, to top it off, they've adopted a belligerent attitude toward those vital markets and somehow expected that to not have any blowback.
You make good points about factors I've probably downplayed, especially the idea of possible good will toward the US and other factors that may provide a tailwind for US manufacturers vs the other legacies.
OTOH, you may be missing an essential factor in China's potential for success. IMO, China is no longer just competing on price, especially against the legacies. Chinese automakers appear to have created a production process and supply ecosystem that gives them a significant technology edge. They're no longer just making "me too" products and it's clear the legacies are (mostly) having trouble adjusting to the rate of change needed to keep up.
As an example, Chinese production EVs now lead the industry on battery and charging technology. Most of the EV platforms made by the legacies are on 400 volt platforms, while newer Chinese EVs are on 800-1000 volt platforms and 1.2 volt vehicles are slated to start coming out this year. This gives them a huge edge in fast charging speed (5-15 minutes vs 30-40 minutes). The CyberTruck is on par with this I believe, but they're mostly alone. None of the legacies come close with the possible exception of Hyundai with their 800 volt E-GMP platform (18 minutes from 10-80%).
You can see this in the auto-tech review channels on youtube. There's really been a shift in the reviewer community around perceptions of China's technical competence.
I am aware that the Chinese EV technology stack is impressive. What we're leaving out of the discussion, however, is just how easy it is to achieve this when you don't have to give a good goddamn about profitability for extremely long periods of time because various levels of government are doing whatever it takes to keep you afloat.
If China had not, over the last three decades, taken literally trillions of dollars from its citizenry in various forms (wage suppression, direct taxation, below-market public land sales to manufacturers, fiscal repression on a massive scale) and given it to exporters, it would not have a world-beating EV industry. But it would have a great many other things that would do its people more good and that they would have chosen for themselves if they were offered the chance.
Chinese industrial policy is, at heart, a direct theft from my friends and family in favor of politically connected industrialists, in the name of a vision of comprehensive national strength that leaves the children of the rural poor to collect dust at home while their parents toil thousands of miles away, abandons the elderly to their own devices, placing huge burdens on their children, prevents their grandchildren from owning homes and raising their own children comfortably, forces everyone to endlessly save and prepare against the ill-fortunes of a cruel world that might demand an arm and a leg for a child's education or a parent's medical care at any moment...
If it seems successful, it's because we've allowed the imbalances it produces at home, the grave mismatch between worker incomes and worker output, to be balanced abroad, and the citizenry of both countries has suffered for it as we systemically underinvest in manufacturing at the expense of blue-collar laborers, and they systemically overinvest in manufacturing... at the expense of blue-collar laborers.
I simply do not give a good goddamn if they've become good at this or not. Block them from exporting, allow their enterprises to manufacture here and repatriate the profits back home, and steal the IP by hook or by crook if it's so damned essential to our own needs. Then wait... until they have no choice but to provide sufficient social provision and allow a sufficient share of national income to flow to the person-in-the-street at home, that they no longer *need* to sustain a trillion-dollar annual trade surplus just to balance domestic supply with foreign demand. As a side bonus, the transition to a new economic model will almost assuredly collapse the sitting neo-fascist clusterfuck of a government as well.
May I ask your opinion on the state of the automotive supply chain? People talk a great deal about the OEMs, but they make very few of the components. There's a huge network of automotive suppliers that get ~0 media attention, that are just as critical to the American automotive industry as Ford is.
Each OEM is a bit different but in general Tesla has shown that vertical integration is the winning model right now and everyone is moving in that direction for their EV production systems / supply chains. Common components like cabins, glass, etc. will still be supplied but I think even EV wiring harnesses are coming in-house. It's just way more efficient.
For example, Ford wants to own the entire EV powertrain production.
The big one for EVs is batteries. EV car companies that don't end up making their own batters are going to be outsourcing a critically important component that will likely end up being 20-25% of the total cost.
I am coming at this mainly from a level of expertise on Chinese political economy, trade policy, and foreign relations. I can't speak with any authority on where US automaker supply chains extend upstream. I suspect David_in_Chicago can.
An interesting point on this is that aside from a couple Chinese superstar companies most of them are apparently in quite a financially precarious state. This gives other countries more leverage over China on this issue than is perhaps commonly understood given that as you point out they now really need non-domestic buyers.
"they're going to be dumping those all over the world at highly discounted prices"
Where are they going to be dumping these? Not a single Chinese OEM is registered to sell a vehicle in the US. Nothing is coming here. The EU just raised their tariffs. Those cars aren't leaving China.
You’re correct in the short term, but a long term situation where America/Europe/Japan auto markets are a walled garden with much higher prices is not sustainable. There’s going to be a huge incentive to defect. Do you think Hungary is going to want to pay inflated car prices to prop up German automakers? What happens when Chinese automakers set up factories in Mexico? What happens if a South Korean company enters a partnership with a Chinese manufacturer?
"What happens when Chinese automakers set up factories in Mexico? What happens if a South Korean company enters a partnership with a Chinese manufacturer?"
Then you compete. Just like when Toyota and Honda and then Hyundai and Kia entered the market. I don't think anyone's afraid of the competition from the Chinese OEMs. They have their hands full with Tesla right now. Tesla BTW still has the #1 selling model in China (Model Y) - still shocking everyone in the industry; where they're competing head-to-head in market and winning on price -- mostly because of their production technology.
Re the edit: "They'll dump then everywhere that doesn't have a domestic auto industry to protect. Basically, everywhere but US, Europe, and Japan."
You can include S. Korea on this list too but what I think you're missing is once you exclude these markets you're left with like < 10% of global demand since you need to adjust out the mega low end (e.g., < $2k) in India and the developing markets. There's just not enough demand to absorb the excess production capacity coming out of China. Hence the forecast for Chinese OEM auto exports to decline in 2025.
First, thanks for the pushback. I've tried to follow this as closely as possible, but I could have obviously missed stuff. That said, unless I'm misreading it, that article you posted seems to be predicting exports will grow this year not shrink. They forecast export "growth" will slow to just 10% this year versus 36% last year.
I agree there's no way all the excess production capacity gets absorbed. I think last year they exported ~5 million units. Next year they're ramping up a lot in the UK, Australia, and South America.
I don't have enough knowledge or expertise to say Reuters is wrong for sure, but to me the forces seem to be pushing pretty hard against their predictions.
Also in terms of the health of the legacies, continued sales drops inside China, coupled with even relatively small losses of share elsewhere will be really tough on their cash flows. As I understand it, automaker profitability is all about what happens on the margins.
Yeap. I was just doing quick math subtracting out the planned export growth for the non-Chinese OEMs; so >10% of the exports are just Tesla China and then some other big % is all the other OEM SAIC joint ventures. But I could have explained that in more detail. Another factor is I think the #1 export are the low end Chery models going to developing countries but it's hard to get real data on what is actually going where.
I guess just stepping back to the initial point, "China came out of nowhere and last year built over 30 million of the ~90 million cars sold all across the world." Kind of. Maybe. (1) They didn't come out of nowhere. GM's JV has been producing huge numbers for like 20 years in China, same with VW's, but then (2) a big % of the 30 million were produced by the global auto OEMs in China. So yes, they were produced in China but they weren't produced by Chinese OEMs. Which is a much narrower point for the balance of global manufacturing power.
Reuters has great China auto reporting. I trust this. Current estimates are for Chinese's auto exports to drop in 2025. The 70% number isn't close to accurate. Ford generates > 50% global sales in the US but I think it's 70% of global margin is the US market.
I replied to MagellanNH on the specifics just above but look ... the original point of this thread was:
"Next year they're (China OEMs) supposedly poised to build even more and since domestic demand has crashed, they're going to be dumping those all over the world at highly discounted prices. Next year could really be a bloodbath for legacy auto-makers if anything like that number of cars gets exported by China."
That's not going to happen. That's my point and I think the Reuter's forecast supports that.
It would be nice if it actually did push them through the initial phase of EVs but instead it allowed them to misunderstand where the overall auto market was/is. I, for one, would like a reasonably priced set of cars to choose from. Instead we have this race for the top of the market. And the EV subsidies really let car makers off the hook about how overpriced their offerings were. The overall mix is skewed to the expensive and the low end does not really exist any more.
I don't know where I really fall on the degrowth idea but I am very much interested in disinvesting in lots of stuff - cars are one of them. I want a low feature, low maintenance EV but instead the market wants to give me feature rich vehicles that cost $10 or 20K more than my needs. I will instead just keep driving my 20 year old car as I look for a reasonable used car. Probably would have been a Tesla but can't have that.
"The overall mix is skewed to the expensive and the low end does not really exist any more."
I think one of the big trends most have missed is that cars now last ~ 20 years reliably so the mid and low-ends of the markets are still being served but through the used car market. What happened is OEMs realized the low-end new car can't compete with the off-lease segment for the next level up and for Tesla specifically -- they don't need to produce a Model 2 with a $20k sticker price new vehicle when you can currently buy a 2021 Model 3 for < $20k. Just in terms of size there's 16m new vehicles sold in the US every year and 50m used vehicles. The used market is just much more powerful at this point and that's shifted the entire new vehicle market towards the luxury end ... I mean shoot, Accord and Camry average MSRPs are now > $30k.
EDIT: Maybe said differently ... ~ all NEW vehicles are luxury vehicles at this point but the entire market is serviced by segmenting customers across the depreciation curve.
The GND and the IRA probably cost the democrats the 2024 election and burden future generations w useless, avoidable debt.
I wont take progressives or anyone talking about climate change seriously until they start building nuclear reactors again. All of it is smoke and mirrors, fun to talk about, fun to write about, fun to disparage the republicans about. We have a near zero-emissions solution and have had it for many decades, but the democrats have over regulated it so egregiously nothing can be built.
And just when you thought CA legislators couldn’t get more incompetent (truly stunning news coming out of LA every day), the Diablo Canyon plant was supposed to close in 24 but now that was moved to 2030. Experts say the power plant could stay opened for another 20-40 years, and it currently provides 9% of CA’s power.
IRA provides more support for nuclear power than anything since Obama funded the construction of the Vogtle power plant.
Diablo Canyon, and every remaining operating nuclear plant in the US was saved from the risk of early closure by the IRA's production tax credit for nuclear power. The IRA's investment tax credit for nuclear power covers 30% of the construction cost of new nuclear plants. In addition to these two tax credits, IRA also provides billions in funding for research on advanced reactor technology that's not ready to go to market.
Please show me the recent Republican bills that have provided more support for nuclear power than the democrats have provided.
This isnt about republicans vs democrats, it’s about effective policy making. But, I dont think your making the point you think you are making it political —- republicans are in favor of less regulation, especially environmental regulation.
The idea that the failures of nuclear power in the US are due to over-regulation is crap, imo. Sure, at the margins regulations could be streamlined, but they're really the least of the problems that the US nuclear power industry has faced.
Check out this youtube video with nuclear power expert James Krellenstein. He digs into how much regulation is behind the challenges nuclear power is facing in the US.
When rich people care about something more than poor people, the best solution is often philanthropy. Consider the Gilded Age. Andrew Carnegie thought it was important that smart working class kids have access to books and knowledge. Conversely, temperance scolds told daddy to give up whisky and possibly even beer and buy more books. Many working class dads, exhausted by ten to twelve hours of drudgery and determined to extract some pleasure from their narrow lives, preferred the public house to family book night. Carnegie understood human nature— especially that of grown men— is difficult to change, so he built libraries to give smart working class kids book access. Similar things happened with art museums, operas, free symphonies, etc. Public spirited rich people created cultural amenities the masses didn’t want to pay for and gave them away.
Climate stability is an amenity most working stiffs don’t want to pay for. The decision calculus of a person whose marginal dollar is spent on yachts or even vacation homes is totally different than the decision calculus of a person whose marginal dollar is spent on clothes or air conditioning. Consuming more climate stability makes sense if your income is high enough and doesn’t make sense otherwise. If the monied classes pay for climate stability, normies won’t mind and might even be grateful.
Does not work. What is needed is that each and every decision to emit a molecule of CO2 into the atmosphere or remove a molecule of CO2 from the atmosphere cost or reward the emitter/remover enough that in the aggregate of all emitters/removers optimized the CO2 content of the atmosphere. How could a philanthropist with unlimited fund even DO that?
OK they could do the reward part instead of asking voters to pony up. But I have my doubts.
What philanthropist _could_ do is fund better environmental advocates.
I do not share your fixation on the number of molecules of CO2 that enter and leave the atmosphere. I would rather watch videos of the Netherlands Women’s’ Field Hockey Team destroy their opponents.
My taste for Dutch field hockey is only slightly more unusual than your carbon fetish
If that is your point, don't disguise it as aversion to discussion of the # of CO2 molecules.
Of course my comment is completely agnostic about the numerical cost of the CO2 accumulation. If it is low then that low number will appear in the NPV calculations or in the low rate of taxation of net CO2 emissions.
Renewable Energy Credits are basically this. Every wind turbine sells their electricity on the normal market and sells their green-ness on the REC market. No one wants the RECs because they can still buy the power without paying extra for the REC. So all they do is let you declare yourself as green in some nebulous way, so they are dirt cheap. For example, I personally pay $0.01/kWh extra for "100% clean electricity" and that extra penny goes into the REC market. But if enough people bought them, it actually would be a stable alternative funding source for renewable energy.
I in principle appreciate the argument in favor of a GND in a depressed economy. I might even support it if I had trust that it would be implemented competently and efficiently. Unfortunately, I have zero trust that the Democratic party can execute a GND responsibly.
First, I no longer trust them when they say that the economy needs stimulus. They pushed for huge deficit spending in 2022, when it was clear that inflation was running high, was not temporary, and that households clearly had excess savings from prior stimulus.
Second, any GND that actually made it through congress would look nothing like the GND laid out by MY. There would for sure be pro-union rules, minority owned business set-asides, attempts to push parental leave policies on the companies involved, community review requirements designed to funnel money to non profit orgs, etc, etc.
Yeah, I find myself doubting that the Democratic Party will ever be the party of stoic technocratic optimization and trickle-down supply side regulatory reform that will lift most boats while capsizing some. This just seems very removed from the party’s DNA.
In some ways it’s almost easier to imagine a future GOP having technocratic Climate as Economic policies than the left ever fully embracing it. Despite all the talk of intersectionality, “cares about climate change” and also “cares about disadvantaged minorities or feminism” or whatever aren’t tied together as a law of nature. Writing pro growth pro business deregulatory legislation that happens to help nuclear or hydro or solar interests instead of coal is a much shorter leap. Ultimately Too many left interest groups will fall back on their deep fear that someone somewhere is profiting.
I suspect the next 4 years are going to disabuse of you this notion.
Given the iron grip Trump has on the party, who knows, maybe GOP takes a wildly new direction once Trump is gone. But yeah, the chances of what you describe happening now is extremely low.
Whatever the GOP was 30 years ago (when under GHWB what describe kind of happened with acid rain) is decidedly NOT the GOP today.
This would not be a Republican party I recognize.
You need look no further than Texas. The motivation doesn't matter, the results do.
https://www.enerwrap.com/p/texas-solar-power-generation-overtakes
What you’re describing sounds a lot like Bill Clinton’s brand as I remember it? Obama tried to follow Clinton’s lead on trade at least, but was admittedly less successful. Biden is the worst of the three I think, but even he endorsed stuff like permitting reform.
Also, being pro-immigration definitely isn’t about being coldly technocratic for most Democrats, but it is an example of a supply-side reform that raises most boats while capsizing some.
I see what you're saying. The way I would put it is that Democrats care a lot about concentrated, specific harms to the ingroup, but they don't care too much if those harms fall on the outgroup. So it's hard to imagine a general agenda where Dems push pro-growth regulatory reforms because at least some of those policies will hurt members of the ingroup.
1. Was it widely believed during Clinton's time that free trade would have dispersed benefits and concentrated costs?
Even today, I could see Dems supporting such a policy, but they'd have to be convinced that the concentrated costs would fall on the heads of groups they don't care about (e.g., Trumpers in flyover country).
2. I agree with your point about immigration, but I think the key motivating factor is that Democrats tend to care about immigrants a lot more than they care about whoever is hurt by immigration.
Yeah, NAFTA for example had lots of opposition from Rust Belt dems who expected that it would hurt them and their constituents. Clinton just didn’t care, it passed with the votes of the non-Rust Belt dems and Republicans and he signed it because he thought the overall growth benefits were worth it.
The fictionalized version of Clinton in the 1998 film Primary Colors gives a telling-the-hard-truths speech about how trade means that the factories are going to close and they won’t reopen and Rust Belt communities are just going to have to adapt. The real Clinton was too good a politician to ever say anything like that out loud I think, but that was the zeitgeist at the time.
Dems are fine with talking tough to their constituents, usually, I think it’s mostly just Hillary and Biden that were too weak and uncharismatic to pull it off.
I think the usual median democratic politician is closer to Biden than Bill Clinton in terms of standing up to the groups, unfortunately.
There is nothing at all unusual or unique about the Democratic Party this way. The only difference is that at least one faction in the Democratic Party is organized around technocratic optimization, whereas it’s hard to think of any other party like that. (Maybe the UK Lib Dems, or the Singapore ruling party?)
I agree. But isn't this what the "abundance agenda" is, ultimately? I just struggle to understand how Matt/Ezra Klein/Derek Thompson/etc. think we're going to get there.
I disagree -- all that DNA is still there. Democrats routinely introduce half-a-dozen to to a dozen carbon tax / methane fee / cap-and-trade proposals every Congress along the lines MY describes. We suffered through a spasm of Bernie-ism, born of the long slow recovery from 2008, which was exacerbated by too much caution from the technocratic wing of the party. Then all hell broke loose as The Groups took hold during Trump I and were able to hang on during Biden.
True, but its the best we have.
I understand where your pessimism comes from. But Democrats have shown a willingness to shift on policy before, so I don't know why one would assume that a preference for leaner bills that remove, rather than add, regulation, couldn't be in the party's future.
It's not like people with influence over the party, like Matt himself, or his ol' buddy Ezra, aren't making that argument, and pointing out ways regulation is choking blue economies even as their GDPs stay high.
If the party can go from Mondale to Clinton to Biden then it's clear that "more of the same" should not be expected from the Democrats any more than it is from Republicans. Which makes sense considering how generally non-ideological their voting base is - they have to chase public opinion while Republicans, with their giant media apparatus, generate it. (It seems like a bad place to be, strategically, but it's where we are.)
(As an example of Republicans creating public opinion go see how crucial immigration was considered as a campaign issue before early 2024, when inflation cooled and Fox began obsessively covering immigration instead. [I will tell you: barely on the radar.] And not only did their viewers follow them on that journey, the legacy media did as well, enthusiastically.)
Where do you live? Because at least in NYC immigration has been a huge issue since well before early 2024. Did you miss the whole Abbott bussing thing?
Yeah immigration has been Trump's #1 issue since he's been a candidate, so it's been a top issue since at least 2016.
Stimulus often gets pushed as an alternative to redistribution. Even during a full employment economy, a 40th percentile worker isn’t doing all that well and would benefit from an increase in income. Taking from elites to enrich 40th percentile sum creates losers who have the cultural and political capital to push back. Therefore, it’s easier to just say “we need stimulus.” If you refuse to endorse stimulus, you have to either convince the 40th percentile worker that he can and will benefit from redistribution, convince him that supply side reform will help him or tell him to screw off. Constant stimulus may seem the path of least resistance, the issue is inflation
We never* need "stimulus." Fiscal policy should always have as one of it's components increasing real income and redistributing consumption from where it will do to least to the most good is another. There can be trade offs between the two, but I'm not sure if they change much according to whether the Fed is trying to increase or decrease inflation at any given time.
* Every rule has an exception. In principle, if the Fed were producing more or less inflation than needed to facilitate adjustment to shocks, the NPV rule for expenditures could be modified to get a little more or a little less than NPV>0. This may have been the case in 2009, but I do not think that Congress got spending up to the NPV > 0 level, so the point was moot.
Been to Lake Woebegone lately? There will always be someone in the 40th percentile. Our tax system is already highly redistributive as the top one percent pays 40% of all taxes (per a quick search).
Of course, if you want a highly redistributive tax that does not punish work and investment, then replace the income tax with a land value tax.
Sure, the lake woebegone effect is real, which means you need constant redistribution to churn the money
"inflation was running high, was not temporary"
My current hypothesis is that the inflation was, indeed, temporary, and fueled by all that excess savings. But, by doing all the deficit spending, they poured fuel on the fire, so instead of inflation dwindling as the savings got spent down, it kept going from all the extra money injected into the economy.
I think it's impossible to say whether it would have been temporary or not because of the counter-factual.
“Excess savings?” We save less than any country. Make China get rid of its excess savings, thanks
I think more attention needs to be paid to the sense of betrayal articulated. Democrats nominated Biden, specifically as a rejection of leftist Warrenite slush fund slop, and somehow we got 4 years of slop anyway. Democrats could nominate Dick Cheney’s ghost in 2028 and I’d still worry that some nonprofit empty suit will have a voice within the administration to say “yes China has their nukes pointed at us, but would it be equitable to disadvantaged groups if we stopped them from shooting?”
The thing that stands out to me about the GND debate of several years ago isn't the misguided ideas about policy, but rather the misguided ideas about politics.
Dave Roberts wrote about how, sure, a Iot of the climate policies would be unpopular with the public rubes, but that's why the GND also includes a jobs guarantee and M4A. Because of "political economy" is how he put it.
GND proponents not only didn't realize that the economic parts of the plan weren't popular, they thought they'd be so popular that it would make the overall GND an electoral winner.
Has that hypothesis really been tested? A well structured jobs guarantee (which would be a guarantee for people who showed up mostly on time and consistently sober and were generally willing to follow instructions) could be really, really popular. People are bad at predicting their reactions to policy choices. Normies in 1932 were NOT crusading for Keynesian economics. Even in 1936, it’s unlikely the median voter could have explained counter cyclical stimulus. Yet the original new deal was massively popular and basically delivered a generation of Democratic majorities.
Most well structured public benefits end up being popular once people benefit from them. The rub is in getting them passed
100% of people who show up on time, consistently sober and are willing to follow instructions, already have a job.
Right now they do. Presumably the well-structured federal jobs guarantee would only kick in when unemployment rises, or it would pay just below minimum wage, or something else like that, so that it’s really a countercyclical stimulus.
"Presumably" is doing a lot of work there. That approach would make sense, but I doubt it would be what gets passed. Looking at the nightmare of unemployment insurance implementation, especially during the pandemic, I also suspect that the implementation of more complex processes like creating and assigning jobs to people would end up being a fiasco in the base case.
the difference between you and i is i feel more solicitude for the people who are on time 72% of the time and follow instructions 89% of the time
Are those people unable to find employment in this economy?
You can find employment. Will it pay you enough to afford the car that you need to consistently get to that employment on time? Maybe not. (I work with a lot of young people who are sober and reliable to the extent possible given their circumstances).
the numbers i have would put you on the cusp
I suspect that is one of many differences, but, yes, I don't believe a jobs program for such a person would be an effective use of public resources.
We have Medicaid and food stamps today to help someone who chooses not to be on time or follow instructions often enough to be employed. I would support an even more generous (within reason) subsidy for such a person, but setting up a jobs program wouldn't be on my list of supported policies.
leisure is a blessing for those with enough discipline to enjoy it and a curse for those who lack self control.
i’d like to push dissipated people towards work
I have never seen work without accountability work. The government hires you and tells you to pick up trash on the highway. But if you don't pick up trash on the highway, you still have a guaranteed job. How long do you think people are going to pick up trash on the highway?
"We have Medicaid and food stamps today to help someone who chooses not to be on time or follow instructions often enough to be employed."
It should be noted that as of 2021, 67% of Americans who receive Medicaid are working either full or part time. See chart imbedded in this article https://www.kff.org/medicaid/issue-brief/understanding-the-intersection-of-medicaid-work-a-look-at-what-the-data-say/
In the current economy, I actually have sympathy for your point. And have no doubt that some portion of the people who in the pie chart imbedded would be working "full time" instead of "part time" or maybe wouldn't be on disability if they were more responsible with their own lives.
But I hope this chart shows that a pretty significant portion of Americans who receive benefits like Medicaid are either already working or in a position to receive aid on some sort of merit "retired, a student etc".
In a full employment economy, those people will have jobs too.
However, what we learned this year is that people are supposedly so enraged by a temporary bout of inflation that no politician will ever push for a full employment economy that also includes some inflation ever again.
So in the future progressive economic policy will have to focus on creating band aids, like a federal jobs guarantee, to staunch the bleeding from high interest rates/low fiscal stimulus actions.
Would this be over-learning the lesson? It’s easy to see how people get upset about 10 to 20 percent price increases in salient items like groceries and cars but would a more typical bout of inflation around 5% yoy without even be noticeable if the right wing press didn’t freak out (yes they’re going to freak out so that’s got to be priced in I admit).
Plus shouldn’t the central bank in the absence of major supply disruptions be more effective at keeping it in check?
Nonsense. They have to get through the online application process first, which is going to discourage a huge chunk of people.
Popular or not a jobs guarantee would still be bad policy
The New Deal did nothing that investing enough to make NPV of the marginal investment 0. What the New Deal did to (very inadequately) push the economy out of depression was go off gold. But the Fed we had didn't take advantage of breaking the gold link to inflate more.
Second thought, there is something very disturbing about the ideologues who push degrowth. They constantly lie to substantiate their position. They are comfortable with dishonesty, because they tell themselves they are saving the world from disaster. They hold supremely misanthropic views and assert that change/innovation are not possible. This is why they lie about the mass reduction in poverty and rise in average living standards across the world over the past 50 years. They then assert that mass reductions in real output of both goods and services would not negatively affect human welfare. They assert that somehow people will willingly cut their incomes and living standards in half.
This is the same arrogant and self assured mentality that the actual practitioners of Communism held. All forms of human immiseration are acceptable, since they are brining about the prophesied utopia. If these people gain influence and power, they would commit crimes we haven't seen since Mao or Stalin.
What is incredibly strange about degrowthers, and Matt points this out in the piece, is that they have had absolutely no political success with attracting voters and yet they have weasled their way into the Democratic Party and left discourse.
The left should be about getting people out of poverty, and that requires both redistribution and growth.
Is this only a left-wing phenomenon? Nativist, anti-immigration elements on the right are advocating for de-facto degrowth policies, even though they don't identify them that way. Resistance to change, protection of incumbent companies and technologies and patterns of physical development from competition and replacement with superior variants... it's all "anti-growth".
There is a salient difference in acknowledging or even celebrating the fact that your policies will prevent growth, compared to just embracing policies with no thought about growth.
I mean MAGA being drenched in nostalgia as it is in a lot of ways a "degrowth" philosophy at its very core.
I think this is dramatically mistaken. Much of the appeal of nostalgic times is that's when the US economy was growing dramatically. E.g. the 90s, the 50s-60s.
I agree, but one of the salient differences is that when you describe the results of your policies as the purpose of your policies, it makes it easier to avoid them. Very few people think "de-growth" is a good idea, but lots of people support de-growth policies by another name.
They have been successful in infiltrating the European left. The free ride on environmental groups and propose non-solutions to climate change. They are one reason the salience of climate change policy and the left are becoming less popular with the electorate.
That and they are so negative and pessimistic.
...and just factually wrong about so much. Everything from the dangers and costs of nuclear power to the fact that economic growth per unit of energy and unit of material consumed continues to climb. I was looking at the way Germany's grid has evolved since the Greens-led demand for nuclear decommissioning took hold. While the growth in renewables has been spectacular, hard coal, lignite and natural gas still provide about a third of the total tWhs, but less than the number of tWhs provided by German nuclear as recently as 2010. Germany could have a zero carbon electrical grid today if political consensus had been built around rapidly growing renewables as a complement to existing nuclear rather than as a replacement for it.
Germany decommissioning its nuclear was a huge own goal
One reason for optimism is that once the track record of progress on decarbonization becomes unassailable in the next decade, it will remove much of the rationale for degrowth. Solar will save us from annoying political conversations as well as climate change.
In Europe degrowth may not make sense as policy, but I get why Europeans would dislike growth. Paris and Rome would be much more enjoyable with a tenth the tourists!
They don’t have *no* success with attracting voters. I do think there are a percent or two of voters who buy this stuff, which is a lot more than there were a decade or two ago.
Has anyone figured out how this happened? My hypothesis is that the culprit is European cross pollination. You can see this as well in eg foreign policy, tech policy, etc.
It’s time for American liberals to realize that Europe is the ultimate basket case, not cool and sophisticated, and should never be emulated.
It really only requires growth.
Degrowthers feed the MAGA narrative that climate change is a hoax designed to advance other agendas.
This is precisely why, despite the fact that I'm seriously concerned about climate change/global warming, ocean acidification, etc., I oppose the vast majority of environmental regulations proposed because they are almost always structured in ways that are deliberately harmful to the economy/pro-redistribution in completely unnecessary ways.
"assert that change/innovation are not possible"
Except, of course, for the rather minor change that they think is possible, where we convince the entire human race to stop responding to incentives, and not care about things like earning more money, having more stuff, etc.
If the degrowthers and defunders ever get power, emigrate
I love the point about how cutting red tape on clean power and home building (esp. in blue areas that have cleaner grids and denser cities) can benefit the climate. That’s a winning message.
I'd like to see a true expert, like Jesse Jenkins and the Princeton ZERO Lab, weigh in on the benefits of policies to encourage denser building on carbon emissions. My guess is that, while undoubtedly beneficial, the timeline to change levels of density, especially in SFH neighborhoods being upzoned, is so long as to contribute virtually nothing to meeting the requirement over the next couple decades.
Re: benefits of the various policies. A few years ago researchers at Berkeley had analyzed the various policies/changes that each city in CA could make and its effect on carbon emissions. For the cities I checked in SF Bay Area, after Urban Infill came heating electrification, commercial efficiency, and vehicle mile reduction. For Los Angeles, the top 3 were the same but the order different. Here's the article link, and then also a calculator they put together for you to play with the effects:
https://www.cogitatiopress.com/urbanplanning/article/view/1218
https://coolclimate.berkeley.edu/ca-scenarios/index.html
Your question about "timeline" is interesting. Yeah the timeline is long to increase the level of density, but I think all of the options are hard for different reasons. These are all really hard to do also! The first two (heating and efficiency) require lots of people to make individual decisions, but also have already been encouraged by legislation such as the BIL and the IRA. The next one (vehicle miles reduction) is also hard without increasing housing density and/or rezoning to integrate commercial and residential areas. Nothing easy, it's all a huge project.
That study that Andrew Ahern linked is so braindead dumb.
Asking people if they want to work fewer hours...almost everyone wants to! But what they won't want is to earn less money as a consequence of working less.
Universal healthcare...yeah, anyone would want that for free if they could get it! But in addition to how it's going to be paid for, who's going to do the labor, especially if you cut down work hours? Only way that's sustainable is if bunch of people all of tbe sudden are going to find their way in the healthcare sector that aren't suited for it.
A ban on ads...everyone finds ads annoying! But people will find ways to get information about products they want. And if not enough other ads can fill in, then people will have to pay money to get what was previously ad supported, which they won't like. Not to mention the First Amendment problems that arise.
That was such a great example of everything bagel nonsense that would never hold up once people's full incentives are accounted for.
“People want all the benefits with none of the costs; also, water is wet and the bear defecates in the woods, full story at 11”
Option C: Magic Rainbow-Farting Unicorn Ponies.
What we really need is the opposite. Magic Carbon Capture Unicorns where the direction of the rainbow is reversed.
Brilliant! Have a Nobel Prize!
Everybody gets a pony and a blowjob!
I was wondering the other day how much ad spending is actually effective or is it just something that companies think they need to do? Maybe it’s a lottery mentality where you buy a lot of tickets and hope for a big payday — you gotta pay to play kind of thing.
John Wanamaker is reputed to have said over a hundred years ago that he knew that half of the money he spent on advertising was wasted; the trouble was that he didn't know which half. Unlike so many mysteries of the late 19th Century that have yielded up their secrets to inspired study, we don't seem any closer to solving this one, and not for lack of trying.
I'm guessing it depends on the industry--some are very dependent on mass advertising to get the word out to customers as a whole, others are able to run on word of mouth or very targeted campaigns at a narrower, more discrete group of people that are going to be their customers.
I’d love to know if any larger companies have run controlled experiments where they deploy advertising in one geographic market and compare it to another.
Like you say, there are different goals and contexts for advertising which along with the challenge of establishing a control must make it difficult to study in the wild.
Very likely some of the big companies have! But research in these sorts of fields is very much *not* published, because they don’t want competitors to know.
If meaningful results existed, it's hard to believe that they've never been leaked, anywhere. If they had been, they'd be in the curriculum of every MBA program.
I'm guessing they have, but I'm not an ad expert on that kind of level so I can't say for sure.
All of those CEOs out there would make a ton more money if they could get away with cutting the marketing budget without hurting sales. So I think the baseline assumption has to be that it works, at least as well as things work in general.
This is my baseline assumption but it cuts against Mercier’s view that people are rarely persuaded by mass communication…
https://www.persuasion.community/p/propaganda-almost-never-works?triedRedirect=true
That piece includes a link to this paper that finds a very little positive ROI for television advertising https://onlinelibrary.wiley.com/doi/abs/10.3982/ECTA17674
I wonder if there’s an Odd Lots episode on this…
There is a two part Freakonomics episode
https://freakonomics.com/podcast/does-advertising-actually-work-part-1-tv-ep-440/
Banning ads —> paid services —> people protest —> government steps in and subsidizes or nationalizes services = winning
You forgot the "—> higher taxes to subsidize/nationalize those services" that gets in the way of making it able to be winning.
Nationalizing Facebook, Google, YouTube, and the streaming services could be a rounding error depending on how you did it. Of course, the lawyers would find a way to make it more expensive.
Bigger problem with doing that is not the cost but that the First Amendment would apply, which would turn the places into massive spamfests.
Yeah, it would probably be interpreted that way by our current justices to punish a liberal government for taking over the platforms. I don’t think there’s anything in 1A intrinsically that gives you a right to a platform, you just have the right to not be prosecuted for speaking or self-publishing your views. But like everything these days it would be subject to interpretation by a political SC
No one has a right to a platform provided by the government, but once the government does provide such a platform, it has to be content neutral and speaker neutral over who's allowed to use it. And because online platforms lack rivalrousness, time, place, and manner restrictions become less viable. Spam is annoying, but it's also very clearly a form of expressive speech. About the only restrictions I could see on it on a public venue would be if it engages in fraudulent behavior.
I dunno, it isn’t a bad thing for healthcare to take up a huge chunk of a rich country. It would be good for America if 90% of Silicon Valley and 90% of Wall Street instead were doctors, nurses, medical researchers, or worked in manufacturing or construction doing *useful* things.
That's a fair argument to make--I just don't know if the public at large would want it.
That wouldn’t make everyone more poor
Which basically would hurt whom, Silicon Valley landlords? It’s hard to say that the concentration of wealth in SV really helps, say, the barista in Cupertino that has to live all the way out in Stockton. Thus the traditional arguments for growth are kind of upended by the housing theory of everything.
And many of the products SV sells are largely harmful just anyway by being addictive or disruptive. Same with Wall Street. The best you can say about it is that it probably helps the arts because the money in NYC keeps a thing like Broadway viable in a way that might not be possible elsewhere.
Say what you will about Big Pharma and the explosive growth in healthcare costs, it at least develops products that help people!
What you are proposing is turning Silicon Valley and New York into Detroit, a city where a preeminent American industry that caused numerous negative externalities has contracted, leaving housing stock that is affordable for service workers. This may be a tradeoff that you are comfortable with, but I can bet that it would be a hard sell to the rest of the country.
It would probably be easier to build more housing in Cupertino and better transit to Stockton so that more people can participate in the growth.
You would have to measure the value of the other goods and services created/provided instead. It’s hard to measure the hypothetical value of a lot more healthcare goods and services compared to the real measured value of software and financial goods and services.
But there’s a second point too, which is that the measured value of revenue from software and financial services may not measure the actual quality of life they provide. GDP and wealth are meant to be real measures of quality of life, but they are approximated with the dollar value people pay for them. This means that things like the transition from CDs to streaming music were vastly undercounted in the amount of wealth they created, because consumers were able to bargain the price way down, despite getting more total benefit of music consumption. There are arguments that the value of financial services and software are overestimated by looking at the dollar values they cost (though I’m not sure how strongly to agree with those arguments).
IMO, Matt's assessment of the IRA's cost/benefit math doesn't price two essential benefits it provides.
First, EVs don't just reduce carbon emissions, they also pollute the air a lot less. The same is true for cleaning up the electric grid. Studies vary, but I don't think it's controversial that converting the passenger fleet from gas to electric will save 15k to 20k lives per year.
Second, a big part of the IRA's focus was on increasing the US industrial base in key areas. This dramatically affected how incentives were structured and how much it cost.
This is a good point.
Regenerative breaking creates more fine air particulate from tires than with traditional ICEs. That is one downside of BEVs vs ICEs that is being studied. Though that negative effect is probably smaller than the effect of combustion.
I don't think the tire wear problem is just about regenerative breaking. Regenerative breaking reduces particulates from brake pads. The problem is EVs are much heavier than ICE cars and that means more particulates from tire wear from all driving.
The question is whether the reduction in particulates from regenerative braking (and reduced brake pad wear) outweighs the gains in particulates from faster tire wear overall.
Studies I've seen are all over the map on this question and it doesn't' seem to be settled yet.
I stand corrected.
To be fair, I think your big picture point about EVs and higher non-combustion particulate emissions is still in play, at least to some extent.
Is tire life much shorter with EVs than ICEs? Do you have hard numbers on that?
Not off hand but I've spent a ton of time on EV enthusiast forums and it's a generally accepted truism in those communities.
I thought it was the opposite - fine particulates are created either by brake pads skidding against the brake disc, or by tires skidding against the road. While you’re doing regenerative braking, neither happens - the force is exerted by a magnetic field.
Ah, I see someone else in the thread mentioned this, but the issue is that increased vehicle weight means more tire wear in general. (Which I suppose raises the question of whether tire particulates are more or less bad than metal particulates.)
"... converting the passenger fleet from gas to electric will save 15k to 20k lives per year."
Because of cleaner air? Safer cars?
Cleaner air.
https://news.mit.edu/2013/study-air-pollution-causes-200000-early-deaths-each-year-in-the-us-0829
https://www.bmj.com/content/383/bmj-2023-077784
When EV's aren't quite there yet. When they are consumers will switch all on their own.
Will that happen if the subsidies are removed? Maybe; I'm not convinced. The domestic EV industry has not yet reached takeoff. Especially if its core customer base, climate-conscious liberals, abandon Tesla, as is already happening.
IMO, it'll mostly depend on how fast and how far battery prices drop. Most of the analysis I'm seeing predicts price parity within just a couple of years. Time will tell on that of course. It also depends on charging availability and speed, but both the current state of things and the trajectory looks promising.
I believe there are decent EVs on the market today that even without subsidies would result in lower monthly driving costs versus their ICE equivalents. MSRP would be higher, but fuel cost differential would be high enough to more than offset the higher car payment. This obviously depends a lot on location and local gas/electric prices.
Eventually as EV's become the clear choice. But of course slower than some would like.
Note I am ok with some government help to get recharge stations built, but not with all the ridiculous requirements they are attaching to it. I actually want them built.
They already are! Theres a question of how fast they will though.
The industrial base could increase more without the the deficits!
What would it take to actually educate even slightly more of the public on how economics and policy interventions work?
Most people just don't think about this, and also lack the background knowledge to do so effectively. When I was in high school (2001-2005 in NY) there was essentially no civics education, and even our "AP Economics" course was a joke taught by a history teacher who couldn't do basic middle-school level math. With so little background, so many true statements just... have no clear path to being widely understood or accepted. And to most people, they sound just like a bunch of lies charlatans peddle.
"This specific kind of tax increase will give you more money."
"Nuclear plants release less radiation than coal plants, even if you average in Chernobyl and Fukushima and TMI, even before you count the effects of all the other kinds of emissions."
"Demolishing old enough buildings is often more environmentally friendly than keeping them."
"Building more houses, including expensive ones, will lower average prices elsewhere. 'Affordable housing' requirements that reduce construction overall will do the opposite."
Sometimes I feel like I'm living in a completely different world than a lot of the people around me, and forums like this are what keep me sane.
We live in a world where people complain that nobody ever taught them about the Trail of Tears or how to balance a checkbook. Things that are fully taught at multiple grade levels across the country to anyone willing to listen.
“Sometimes I feel like I'm living in a completely different world than a lot of the people around me, and forums like this are what keep me sane.“
100%. I almost never express my actual views out loud. I’m not a MAGA person at all, and I support strong environmental policies. But they have to at least stand a chance of actually working. I feel that if a lot of my colleagues and other people I know knew my actual views, which I suppose are kind of lowercase “c” conservative at this point (I think of myself as a classical liberal), they would shun me. When I do tiptoe in the direction of expressing said views, people seem to ignore them and keep sending me alarmist info; not sure if they’re trying to convince me I’m wrong or just not getting the message. I’m really grateful for this space but I wish there were more like it IRL.
You have to start when they’re young and not with supply/demand charts. Need to find better entry points like the dating market, collectables maybe and other hooks.
I think you need to mandate passing a basic economics test (and constitutional law test) to graduate from high school.
you need to understand how supply and demand works. You need to understand that price controls cause shortages. You need to understand about tradeoffs and efficiency.
What externalities are, and how and when government action might be appropriate to fix them.
Not the main thrust of this post, but cards on the table here; I think “historic districts” are an absolute plague on this country. Places like north end Boston or French Quarter are the exceptions that prove the rule.
I’ve noted before, my actual degree is in History from the College of William & Mary. I bring this up because I am hardly anti history.
But take a look at “old” neighborhoods or “historic” districts in places not Philadelphia or Boston. I’d encourage you to go on google maps and literally go down to street level and ask yourself “what the heck is historic about this neighborhood or these buildings?”
Excessive environmental review as damaging as they can be in places like CA at least has defensible purpose. I’m not at all in favor of completely scraping. I’m in favor of amending and I suspect Matt is too. To get back to the main thrust of this article, climate change is very real. Protecting clean drinking water or not excessively polluting the air are worthwhile goals. But historic preservation of whole neighborhoods (not just particular sites?). A total scam as far as I’m concerned for wealthier residents to keep people out and protect home values.
It’s actually worse than you describe if you factor in the resources wasted on environmental reviews of “historic” resources such as train tracks, rusted-out bridges, concrete rail overpasses, crumbling buildings filled with hazmat, and so on.
I think focusing on the excessive cases is key, though. Most people are going to instantly think of historic neighborhoods (Church Hill, for example, with give me liberty or give me death) or beautiful thriving neighborhoods that are symbolic of the city, like the Fan District. Most people are NOT going to think of train tracks.
Delisting the former would be rabidly opposed. The latter is going to mostly get questions about what purpose that was supposed to serve in the first place. It’s important to choose those battles carefully.
Most of the historic districts and designated buildings I am familiar with actually are historic, are considered an important part of the local landscape, and are, to put it bluntly, beloved by a whole lot of non-owners.
To give Richmond as an example, since it’s relatively near to where you went to school, you could probably theoretically find something LESS popular than redeveloping the Fan District, Church Hill, or Shockoe Slip with lots of high rises, but it would probably need to be along the lines of large tax increases on the middle class or reinstating the draft to be equally unpopular with locals.
I don’t doubt that there are silly historic designations, and I don’t doubt it has been misused on occasion, but in general historic districts get a lot of support from people who have no direct financial interest in those historic buildings. A generic attack on historic districts, without qualifications, would be wildly unpopular, because the historic districts most people then think of are the ones they love to look at and the ones that give them a sense of place.
Students for Justice in Palestine has a post about the LA fires, saying "climate collapse draws near. The only solution is land back and the complete eradication of US imperialism". I realise SJP is not running policy for the Democrats. But this is an extreme example of an approach that's become widespread on the left of making demands from folks while telling them you oppose their way of life. This is just not an effective persuasion tactic. I can't think of any other major group that does this. If left-wing groups believe in the importance of their policy goals, they should stop doing it.
https://www.instagram.com/nationalsjp/?hl=en
(I found this out while looking for their comments on the ceasefire)
"We want to destroy your way of life completely, but with Medicaid for All!"
The whole idea of "decolonization" is really just an repackaging of blood and soil ethnonationalism. Adherents to this ideological framework have difficulty concealing their desire for ethnic cleansing and actual violent genocide of peoples they label "colonizers."
What is a really sick about this specific take by them is that it dehumanizes members of first nations, asserts those people do not want to live in a modern society with modern material benefits, and that they will somehow act as mystical elves to satiate the moral feelings of a bunch of privileged asses living off their parents.
“The whole idea of "decolonization" is really just an repackaging of blood and soil ethnonationalism.”
I’m a political geographer, and your sentence captures very well something that I’ve long had kicking around in my head. There’s a lot of work in indigenous studies that is very literally racist; if there’s a non-indigenous author or collaborator the paper or book or whatever will inevitably contain a lengthy footnote or other statement about how the non-indigenous person is fundamentally and irreparably alienated from the indigenous authors.
I get that there are profound injustices that have been done over decades and centuries, and if I were on the receiving end of them, I wouldn’t accept “oh well, fait accompli and all that. Friends?” as a response. But I also don’t find it acceptable to say “we get to have attitudes that in any other context would be rightly considered blatantly racist, and if you challenge this that’s itself racist and imperialist.”
Anyway, I’ve been working off and on on a paper to this effect, and assuming it gets published I’m pretty scared about possible backlash.
If by #landback, they mean returning to the tradition of some Native Californian tribes to do controlled burns, I'm all for it! Don't think they're aware of that though...
No, they mean the forcible and uncompensated displacement of current inhabitants of LA county. You know, ethnic cleansing of lesser peoples according to their blood and soil mantra.
I'll take these people seriously when they leave.
I'm not sure I'd like to return to the tradition of some Native Californian tribes to do some controlled burns. As I recall, when they were managing the wilderness back in the day, they didn't have to take into account such controlled burns escaping into dense urban environments.
JFC, that’s the kind of over-the-top stupidity that gives environmentalists a bad name.
Like when environmentalists protest tearing down parking garages for housing (CA Sierra Club has done this.)
I say hooray for the First Amendment. It gives brain dead groups like SJP the protected right to spout nonsense like this. And the rest of us have the right to ignore their nonsense.
But do some people believe their junk? Sure. But it's not like being pro-Palestine and anti-Israel has swept the American body politic.
lol meanwhile my Facebook wall is full of people incensed that the right would make political hay out of failures in the Dem response “how dare you! Homes are still burning!”
Students for Justice in Palestine has a great name, but it’s hard to identify which is their worst demand. This probably isn’t even in the running.
When I first read AOC's Green New Deal propose I was taken aback by how substance-less it was. It was merely a list of sentiments and desires with no real policy or actions attached. Even more disconcerting was the fact there were all these labor and anti-business goals attached to this essay that had no relation to climate change or environmental policies. It made it look like greenwashing of the old school socialist agenda (that is Watermeloning before the pro-Hamas crowd adopted to image.)
It was counterproductive like Medicare for All, and the Just-Us Dem wasted so much public time and attention on something that didn't even contain substantive policy actions.
The biggest problem to me was that it had all sorts of demands about better public transit, but not a single demand about legalizing housing density.
Dan, we're somewhat distanced from each other on the ideological spectrum but we're in one hundred percent agreement on what a bag of stupidity the GND proposal was.
I *think* AOC has matured since then and wouldn't make the same dumb mistake again. I hope.
Wasn't the original Green New Deal one of those legislative proposals that was not real? Like, it was proposed during an opposing party's administration with everyone knowing it had no chance of passage? I saw it as a Democratic version of the old Paul Ryan Budget.
The actual proposed law is just a B level college essay. You can look it up and read it, it’s fairly short.
One intended benefit of the EV subsidies in particular and of the GND in general is promoting American manufacturing of EVs and of everything clean energy related. There are lots of people who want to increase American manufacturing, ranging from Noah Smith worrying about war with China to Bernie Sanders worrying about manufacturing jobs, but this desire is a big part of the background for the Green New Deal.
Listen to Jake Sullivan's interview on the Ezra Klein show. He really frames the manufacturing investment as a part of the US cold war with China.
And Chinese EV buildout is motivated by energy independence much more so than by climate change
Among the crippling issues here, is that we've made actually doing this, as opposed to subsidizing it, very, very difficult, and that's just not something the Democrats are able to fix. Almost none of our very large investments in various physical production and physical infrastructure translated into much within Biden's entire 4-year term, and some of it will take decades more at the rate we're releasing the funds and authorizing projects, due to sheer regulatory and permitting bloat that benefits basically only the lawyers and environmental consultants.
Meanwhile, the combined compliance cost for the manufacturing, energy, and construction sectors, which constitute 24% of GDP, is around 8% of GDP, a full third of their output. Even if we posit that compliance is good, which, yes, worker safety, emissions limits, workforce nondiscrimination, all good... we can't spend a third of output on it.
That's well into the realm of pointless make-work grifting, which again benefits only the legal, HR, and consulting professions. The problem is, those exact professions are now all die-hard Democratic voters and donors, among the most reliably blue demographics we have. If the Democrats can't prize their grip from around our throats, and I don't think there's any reason to think we can, we will not be able to preside over a renaissance in American productivity and dynamism in non-knowledge sectors.
I am reduced to hoping the GOP guts everything and we have the sense, when we ride the backlash to try to put humpty back together, to slim him down by a factor of five instead of reconstituting the exact regulatory and legal environment we have today.
Tariffs and subsidies will not paper over the fundamental issues that have made US manufacturing less competitive in world markets.
And since you asked, the single biggest factor is our huge budget deficit, which sets off a number of fiscal and monetary dominoes that essentially enable and finance the trade deficit. We essentially "balance" our trade by exporting debt instead of products.
Meanwhile, keeping out affordable Chinese EVs sends the message that we don't take climate change that seriously.
Life is complicated. Letting BYD sell here would lead to a spurt in EV sales but it's doubtful that that would be sustainable. As it undercut domestic manufacturing, politicians would turn against it and eventually Chinese EVs would be banned, but at the cost of supporting domestic EVs. From a climate point of view, we would be worse off than keeping BYD out from the beginning and subsidizing the domestic industry.
I think we're following exactly the right path here.
I just think it's worth noting that nothing is stopping BYD from competing here. They won the largest bus contract through the LAMTA back in 2017 and have a huge bus factory in California. They just have to play by the same import % vs. total US sales as Toyota, Honda, Kia, etc. have on the auto side.
https://en.byd.com/news/byd-produces-400th-bus-in-lancaster/
Except that Biden raised tariffs on Chinese made EVs to 100%.
Those are just imports. BYD can just follow Hyundai's playbook:
https://www.axios.com/2025/01/15/hyundai-trump-tariffs
Given rising tensions between the US and China, if I was a company in one of those countries, I would not be making massive new manufacturing investments in the other country.
Beyond that, I don't think that the Chinese government would allow it. Given economic conditions in China, I think there's going to be a push to move capital out of China that the CCP is going to fight hard against.
Executive Summary: The right thing to do depends on the circumstances.
I’m continually frustrated by how many people, especially politicians, view economic policy as a matter of eternal moral truth. Always cut taxes. Always create jobs. Always subsidize industry.
It's really difficult to know when the circumstances have changed. It's easy to dump on Biden's legislation now as being overstimulating, but the work for those bills started back in 2020 and continued well into 2021. It really wasn't clear during that time that we would be coming out of the Covid recession just fine and fiery, so it would have taken a lot of high level insight to be pushing something for two years and then say "nah, we don't need this after all, we need to do it this way instead."
I consider myself pretty well read, and I'm sure I would not have been convinced. I know there were some, like Jason Furman making that call, but it wasn't universal. Even today, I have seen conflicting analyses about how much of inflation was caused by fiscal policies and how much was supply chain and lingering covid related challenges. So yes, we overstimulated the economy, but the worst result of that not the inflation, but rather losing the election. The trade off to be made in 2022 between possible inflation and possible lower employment wasn't a question for empirical analysis but rather for political, and ethical, decision.
Well said. It's also true that while we don't need more stimulus *now* that might not be the case in, oh, two or three years. In a coming downturn, we might be very happy to have those EV subsidies to stimulate demand.
I recall lots of articles (including here!) about how to shape policy in an era of high inflation. Well, inflation is 2.7% now. Some high inflation.
Democracy works on the marginal 10-20% that can be swayed on an issue. Works a hell of a lot better than praying your dictator is open to changing his mind.
"Left-of-center elites really want to address the problem of climate change"
I guess in some sense the do, but frankly, their actions and policy positions have been so far removed from creating low cost incentives for less net emission of CO2 into the atmosphere that one could doubt it. And some who oppose the policies they do advocate suspect _do_ doubt it.
They suspect that those elites are trying to use "Climate Change" as a way of advancing other goals: de growth or Socialism, or anti-big business-ism or something.
"but working class voters do not want to bear localized economic costs for global benefits"
This attitude is much more widespread that "working class voters." And perversely, this has led those left of center elites to measures that hide the costs from voters with measures that impose _higher_ costs on them. It does not help that those elites do not themselves understand the perversity.
Relative minor point of the overall article, but the EV subsidies are about way more than just climate.
Experts agree that EVs are going to eventually dominate the car market based on price and performance, but the transition between making ICE cars and EVs is very hard. American (and basically all Western) automakers have been struggling with this. It would be bad if all Western automakers (except for Tesla) went out of business and the world was dominated by Chinese automakers. There’s both the jobs/economic aspect, but car manufacturing capacity is crucial for national security. During WW2, those production lines were converted to making Jeeps and tanks and aircraft.
The EV subsidies help American automakers push through the initial phases of EV development/production which are extremely expensive.
Right. I don't think there's a general awareness of how imperiled the entire legacy auto industry is right now due to the success of the Chinese EV industry.
China came out of nowhere and last year built over 30 million of the ~90 million cars sold all across the world. Next year they're supposedly poised to build even more and since domestic demand has crashed, they're going to be dumping those all over the world at highly discounted prices. Next year could really be a bloodbath for legacy auto-makers if anything like that number of cars gets exported by China.
We can probably protect the US from infiltration by Chinese brands, but that's not going to protect the US legacy auto industry. Around 70% of its revenue come from sales outside the US. Obviously, the economic footprint of legacy automakers will shrink dramatically if sales drop by anything close to 70%.
We just saw the fall of Nissan, which would have gone bankrupt if the Japanese government hadn't stepped in and encouraged Honda to take it over. VW could be the next domino to fall. IMO, the picture is really looking pretty grim, particularly for Europe and Japan, but also for the US.
The US legacy automakers export well under 10% of their output from American factories, mostly models which are built at scale here and more niche abroad, like light trucks. In turn they then import similar proportions of their value-add from abroad, most especially Mexico and Canada, but also China and LatAm.
The rest of their output and revenue comes from local factories in markets like Brazil, Argentina, India, and SE Asia, which supply their home markets.
There is almost no world in which Brazil, Argentina, or India are going to permit the relatively fragile green shoots of industrialization that they've achieved to be gutted by Chinese competition. All of Mexico, Brazil, and Chile are already discussing tariffs on manufactures, Argentina's president has made noises to that effect, India, Indonesia, Malaysia, and Vietnam already effectively do so...
As such there is a very good chance that at some point in the next decade China finds itself in the midst of a deflationary crisis similar to the Great Depression, which outcome they have only staved off thus far because they have the escape valve of exports to avoid harmonizing wages and prices at home.
In the medium-term, however, US automakers have handled expansion abroad relatively well; they're widely invested and deal with host countries mainly as partners in which they seek to earn money through local industrial operations, not dumping grounds for vehicles produced in the US. Japan and the EU are more vulnerable because to the nations where they have market share, they are more frequently just "another exporter taking our money." They have foreign manufacturing operations but many of them are knock-down kit assembly.
This is an excellent comment and a bit surprised it gotten more of a response. Aside from the country responses - which as you said will be severe, especially since China has the world's most protected market. What are Toyota, VW, Ford, Honda, and GM going to suddenly stop producing cars? Currently Chinese OEMs have rounds down to zero global market share outside China. One day they might become serious global competitors but currently they are not serious competitors.
If their trade partners were prepared to tolerate them dumping products which have direct domestically-produced competition at below-cost rates thanks to subsidies to the industrial sector which total 10%+ of GDP, then sure, China would be able to compete very effectively with the rest of the world's automakers without basically any supply chains or productive capacity extending outside China. They transfer such a large fraction of national income to producers that it is effectively impossible to compete without subsidizing the hell out of your own champions.
But... the rich world (excepting maybe Australia and Britain, which will get there eventually) has already functionally said "no" to permitting imports of this entire class of products and is slowly inching towards expanding the sectors in which it diversifies supply chains outside of China. Middle-income markets, of which we can take Brazil, Indonesia, and Mexico as emblematic, absolutely will not permit this to happen and are taking similar steps. India doesn't qualify as a middle-income market normally but has a sufficiently large middle class to be in the same realm for overall demand and is taking similar measures.
Which means that for the automotive market, China will be left trying to export vehicles to low-income markets where there is basically no domestic manufacturing about which politicians are concerned. Those are maybe a few percent of global demand.
I expect, over the coming decade or so, to see a lot of the same when it comes to civil aviation, drones, composite materials, basically anything with dual civil-military uses. As the US in particular invests in building capacity for those industries both at home and in friendlier countries than China, those countries (including, I expect, India, much of LatAm, and most of ASEAN) will have an incentive to not just export to the US's walled garden, but also to take their domestic markets back by hook or by crook.
Well said, David. It's possible that China may have screwed the pooch. They trashed their domestic economy by the mother of all real estate bubbles and are trying to get out of the mess by ramping up exports (i.e., counting on the rest of the world to bail them by allowing free importing their products). And, to top it off, they've adopted a belligerent attitude toward those vital markets and somehow expected that to not have any blowback.
Nicely done, Xi.
You make good points about factors I've probably downplayed, especially the idea of possible good will toward the US and other factors that may provide a tailwind for US manufacturers vs the other legacies.
OTOH, you may be missing an essential factor in China's potential for success. IMO, China is no longer just competing on price, especially against the legacies. Chinese automakers appear to have created a production process and supply ecosystem that gives them a significant technology edge. They're no longer just making "me too" products and it's clear the legacies are (mostly) having trouble adjusting to the rate of change needed to keep up.
As an example, Chinese production EVs now lead the industry on battery and charging technology. Most of the EV platforms made by the legacies are on 400 volt platforms, while newer Chinese EVs are on 800-1000 volt platforms and 1.2 volt vehicles are slated to start coming out this year. This gives them a huge edge in fast charging speed (5-15 minutes vs 30-40 minutes). The CyberTruck is on par with this I believe, but they're mostly alone. None of the legacies come close with the possible exception of Hyundai with their 800 volt E-GMP platform (18 minutes from 10-80%).
You can see this in the auto-tech review channels on youtube. There's really been a shift in the reviewer community around perceptions of China's technical competence.
Here are a couple of good examples:
https://www.youtube.com/watch?v=yf98eWBboFI
https://www.youtube.com/watch?v=ET_OI59TLGY
I am aware that the Chinese EV technology stack is impressive. What we're leaving out of the discussion, however, is just how easy it is to achieve this when you don't have to give a good goddamn about profitability for extremely long periods of time because various levels of government are doing whatever it takes to keep you afloat.
If China had not, over the last three decades, taken literally trillions of dollars from its citizenry in various forms (wage suppression, direct taxation, below-market public land sales to manufacturers, fiscal repression on a massive scale) and given it to exporters, it would not have a world-beating EV industry. But it would have a great many other things that would do its people more good and that they would have chosen for themselves if they were offered the chance.
Chinese industrial policy is, at heart, a direct theft from my friends and family in favor of politically connected industrialists, in the name of a vision of comprehensive national strength that leaves the children of the rural poor to collect dust at home while their parents toil thousands of miles away, abandons the elderly to their own devices, placing huge burdens on their children, prevents their grandchildren from owning homes and raising their own children comfortably, forces everyone to endlessly save and prepare against the ill-fortunes of a cruel world that might demand an arm and a leg for a child's education or a parent's medical care at any moment...
If it seems successful, it's because we've allowed the imbalances it produces at home, the grave mismatch between worker incomes and worker output, to be balanced abroad, and the citizenry of both countries has suffered for it as we systemically underinvest in manufacturing at the expense of blue-collar laborers, and they systemically overinvest in manufacturing... at the expense of blue-collar laborers.
I simply do not give a good goddamn if they've become good at this or not. Block them from exporting, allow their enterprises to manufacture here and repatriate the profits back home, and steal the IP by hook or by crook if it's so damned essential to our own needs. Then wait... until they have no choice but to provide sufficient social provision and allow a sufficient share of national income to flow to the person-in-the-street at home, that they no longer *need* to sustain a trillion-dollar annual trade surplus just to balance domestic supply with foreign demand. As a side bonus, the transition to a new economic model will almost assuredly collapse the sitting neo-fascist clusterfuck of a government as well.
May I ask your opinion on the state of the automotive supply chain? People talk a great deal about the OEMs, but they make very few of the components. There's a huge network of automotive suppliers that get ~0 media attention, that are just as critical to the American automotive industry as Ford is.
Each OEM is a bit different but in general Tesla has shown that vertical integration is the winning model right now and everyone is moving in that direction for their EV production systems / supply chains. Common components like cabins, glass, etc. will still be supplied but I think even EV wiring harnesses are coming in-house. It's just way more efficient.
For example, Ford wants to own the entire EV powertrain production.
https://corporate.ford.com/articles/electrification/ford-commits-to-manufacturing-batteries.html
https://media.ford.com/content/fordmedia/fna/us/en/news/2021/05/24/van-dyke-plant_s-name-change-electrification.html
The big one for EVs is batteries. EV car companies that don't end up making their own batters are going to be outsourcing a critically important component that will likely end up being 20-25% of the total cost.
I am coming at this mainly from a level of expertise on Chinese political economy, trade policy, and foreign relations. I can't speak with any authority on where US automaker supply chains extend upstream. I suspect David_in_Chicago can.
An interesting point on this is that aside from a couple Chinese superstar companies most of them are apparently in quite a financially precarious state. This gives other countries more leverage over China on this issue than is perhaps commonly understood given that as you point out they now really need non-domestic buyers.
"they're going to be dumping those all over the world at highly discounted prices"
Where are they going to be dumping these? Not a single Chinese OEM is registered to sell a vehicle in the US. Nothing is coming here. The EU just raised their tariffs. Those cars aren't leaving China.
https://www.reuters.com/business/autos-transportation/eu-slaps-tariffs-chinese-evs-risking-beijing-payback-2024-10-29/
You’re correct in the short term, but a long term situation where America/Europe/Japan auto markets are a walled garden with much higher prices is not sustainable. There’s going to be a huge incentive to defect. Do you think Hungary is going to want to pay inflated car prices to prop up German automakers? What happens when Chinese automakers set up factories in Mexico? What happens if a South Korean company enters a partnership with a Chinese manufacturer?
We can’t go back to the 70s, where Americans have much worse and more expensive cars because their manufacturers don’t want to compete
"What happens when Chinese automakers set up factories in Mexico? What happens if a South Korean company enters a partnership with a Chinese manufacturer?"
Then you compete. Just like when Toyota and Honda and then Hyundai and Kia entered the market. I don't think anyone's afraid of the competition from the Chinese OEMs. They have their hands full with Tesla right now. Tesla BTW still has the #1 selling model in China (Model Y) - still shocking everyone in the industry; where they're competing head-to-head in market and winning on price -- mostly because of their production technology.
They'll dump then everywhere that doesn't have a domestic auto industry to protect. Basically, everywhere but US, Europe, and Japan.
The US is an important market of course, but as I said above, 70% of US automakers' revenue comes from sales outside the US.
https://www.theautopian.com/why-britain-has-become-one-of-chinas-favorite-places-to-sell-cars/
https://www.carsales.com.au/editorial/details/vfacts-2023-chinese-cars-now-a-dominant-force-in-australia-144001/
https://www.reuters.com/business/autos-transportation/chinas-byd-starts-construction-manufacturing-complex-brazil-2024-03-06/
Re the edit: "They'll dump then everywhere that doesn't have a domestic auto industry to protect. Basically, everywhere but US, Europe, and Japan."
You can include S. Korea on this list too but what I think you're missing is once you exclude these markets you're left with like < 10% of global demand since you need to adjust out the mega low end (e.g., < $2k) in India and the developing markets. There's just not enough demand to absorb the excess production capacity coming out of China. Hence the forecast for Chinese OEM auto exports to decline in 2025.
First, thanks for the pushback. I've tried to follow this as closely as possible, but I could have obviously missed stuff. That said, unless I'm misreading it, that article you posted seems to be predicting exports will grow this year not shrink. They forecast export "growth" will slow to just 10% this year versus 36% last year.
I agree there's no way all the excess production capacity gets absorbed. I think last year they exported ~5 million units. Next year they're ramping up a lot in the UK, Australia, and South America.
I don't have enough knowledge or expertise to say Reuters is wrong for sure, but to me the forces seem to be pushing pretty hard against their predictions.
Also in terms of the health of the legacies, continued sales drops inside China, coupled with even relatively small losses of share elsewhere will be really tough on their cash flows. As I understand it, automaker profitability is all about what happens on the margins.
Yeap. I was just doing quick math subtracting out the planned export growth for the non-Chinese OEMs; so >10% of the exports are just Tesla China and then some other big % is all the other OEM SAIC joint ventures. But I could have explained that in more detail. Another factor is I think the #1 export are the low end Chery models going to developing countries but it's hard to get real data on what is actually going where.
I guess just stepping back to the initial point, "China came out of nowhere and last year built over 30 million of the ~90 million cars sold all across the world." Kind of. Maybe. (1) They didn't come out of nowhere. GM's JV has been producing huge numbers for like 20 years in China, same with VW's, but then (2) a big % of the 30 million were produced by the global auto OEMs in China. So yes, they were produced in China but they weren't produced by Chinese OEMs. Which is a much narrower point for the balance of global manufacturing power.
EDIT: Here's an example of how the JV exports look: https://gmauthority.com/blog/2022/07/saic-gm-exported-its-1000000th-vehicle/
Reuters has great China auto reporting. I trust this. Current estimates are for Chinese's auto exports to drop in 2025. The 70% number isn't close to accurate. Ford generates > 50% global sales in the US but I think it's 70% of global margin is the US market.
https://www.reuters.com/business/autos-transportation/chinas-car-sales-extend-gains-dec-2025-01-09/
That article doesn't say anything about Chinese exports falling in 2025. It says that export growth will slow to only 10% in 2025.
(10% annual growth is low relative to their export growth rate in recent years, but that still isn't a drop.)
I replied to MagellanNH on the specifics just above but look ... the original point of this thread was:
"Next year they're (China OEMs) supposedly poised to build even more and since domestic demand has crashed, they're going to be dumping those all over the world at highly discounted prices. Next year could really be a bloodbath for legacy auto-makers if anything like that number of cars gets exported by China."
That's not going to happen. That's my point and I think the Reuter's forecast supports that.
It would be nice if it actually did push them through the initial phase of EVs but instead it allowed them to misunderstand where the overall auto market was/is. I, for one, would like a reasonably priced set of cars to choose from. Instead we have this race for the top of the market. And the EV subsidies really let car makers off the hook about how overpriced their offerings were. The overall mix is skewed to the expensive and the low end does not really exist any more.
I don't know where I really fall on the degrowth idea but I am very much interested in disinvesting in lots of stuff - cars are one of them. I want a low feature, low maintenance EV but instead the market wants to give me feature rich vehicles that cost $10 or 20K more than my needs. I will instead just keep driving my 20 year old car as I look for a reasonable used car. Probably would have been a Tesla but can't have that.
"The overall mix is skewed to the expensive and the low end does not really exist any more."
I think one of the big trends most have missed is that cars now last ~ 20 years reliably so the mid and low-ends of the markets are still being served but through the used car market. What happened is OEMs realized the low-end new car can't compete with the off-lease segment for the next level up and for Tesla specifically -- they don't need to produce a Model 2 with a $20k sticker price new vehicle when you can currently buy a 2021 Model 3 for < $20k. Just in terms of size there's 16m new vehicles sold in the US every year and 50m used vehicles. The used market is just much more powerful at this point and that's shifted the entire new vehicle market towards the luxury end ... I mean shoot, Accord and Camry average MSRPs are now > $30k.
EDIT: Maybe said differently ... ~ all NEW vehicles are luxury vehicles at this point but the entire market is serviced by segmenting customers across the depreciation curve.
This is interesting - it’s a lot like the housing market, where the new market is all luxury, and other segments are served by resale and filtering.
The GND and the IRA probably cost the democrats the 2024 election and burden future generations w useless, avoidable debt.
I wont take progressives or anyone talking about climate change seriously until they start building nuclear reactors again. All of it is smoke and mirrors, fun to talk about, fun to write about, fun to disparage the republicans about. We have a near zero-emissions solution and have had it for many decades, but the democrats have over regulated it so egregiously nothing can be built.
And just when you thought CA legislators couldn’t get more incompetent (truly stunning news coming out of LA every day), the Diablo Canyon plant was supposed to close in 24 but now that was moved to 2030. Experts say the power plant could stay opened for another 20-40 years, and it currently provides 9% of CA’s power.
IRA provides more support for nuclear power than anything since Obama funded the construction of the Vogtle power plant.
Diablo Canyon, and every remaining operating nuclear plant in the US was saved from the risk of early closure by the IRA's production tax credit for nuclear power. The IRA's investment tax credit for nuclear power covers 30% of the construction cost of new nuclear plants. In addition to these two tax credits, IRA also provides billions in funding for research on advanced reactor technology that's not ready to go to market.
Please show me the recent Republican bills that have provided more support for nuclear power than the democrats have provided.
This isnt about republicans vs democrats, it’s about effective policy making. But, I dont think your making the point you think you are making it political —- republicans are in favor of less regulation, especially environmental regulation.
The idea that the failures of nuclear power in the US are due to over-regulation is crap, imo. Sure, at the margins regulations could be streamlined, but they're really the least of the problems that the US nuclear power industry has faced.
Check out this youtube video with nuclear power expert James Krellenstein. He digs into how much regulation is behind the challenges nuclear power is facing in the US.
https://www.youtube.com/watch?v=8dhtL_BmR-M
thanks, ill check it out
FWIW, most of my opinion were formed after reading this article
https://blog.rootsofprogress.org/devanney-on-the-nuclear-flop
This article implies the opposite of what you are suggesting (I think)
When rich people care about something more than poor people, the best solution is often philanthropy. Consider the Gilded Age. Andrew Carnegie thought it was important that smart working class kids have access to books and knowledge. Conversely, temperance scolds told daddy to give up whisky and possibly even beer and buy more books. Many working class dads, exhausted by ten to twelve hours of drudgery and determined to extract some pleasure from their narrow lives, preferred the public house to family book night. Carnegie understood human nature— especially that of grown men— is difficult to change, so he built libraries to give smart working class kids book access. Similar things happened with art museums, operas, free symphonies, etc. Public spirited rich people created cultural amenities the masses didn’t want to pay for and gave them away.
Climate stability is an amenity most working stiffs don’t want to pay for. The decision calculus of a person whose marginal dollar is spent on yachts or even vacation homes is totally different than the decision calculus of a person whose marginal dollar is spent on clothes or air conditioning. Consuming more climate stability makes sense if your income is high enough and doesn’t make sense otherwise. If the monied classes pay for climate stability, normies won’t mind and might even be grateful.
Does not work. What is needed is that each and every decision to emit a molecule of CO2 into the atmosphere or remove a molecule of CO2 from the atmosphere cost or reward the emitter/remover enough that in the aggregate of all emitters/removers optimized the CO2 content of the atmosphere. How could a philanthropist with unlimited fund even DO that?
OK they could do the reward part instead of asking voters to pony up. But I have my doubts.
What philanthropist _could_ do is fund better environmental advocates.
I do not share your fixation on the number of molecules of CO2 that enter and leave the atmosphere. I would rather watch videos of the Netherlands Women’s’ Field Hockey Team destroy their opponents.
My taste for Dutch field hockey is only slightly more unusual than your carbon fetish
Doctor: you need to lower your blood cholesterol levels. You’re at high risk of cardiovascular disease.
David Abbott: I do not share your fixation on the number of cholesterol molecules that enter and leave my bloodstream.
good rhetoric, but climate change is far more benign than high cholesterol in s middle aged man
David, you're on record not giving a damn about your future health.
bullshit
If that is your point, don't disguise it as aversion to discussion of the # of CO2 molecules.
Of course my comment is completely agnostic about the numerical cost of the CO2 accumulation. If it is low then that low number will appear in the NPV calculations or in the low rate of taxation of net CO2 emissions.
Renewable Energy Credits are basically this. Every wind turbine sells their electricity on the normal market and sells their green-ness on the REC market. No one wants the RECs because they can still buy the power without paying extra for the REC. So all they do is let you declare yourself as green in some nebulous way, so they are dirt cheap. For example, I personally pay $0.01/kWh extra for "100% clean electricity" and that extra penny goes into the REC market. But if enough people bought them, it actually would be a stable alternative funding source for renewable energy.