" The Obama administration used “Dear Colleague” letters from the Education Department to try to induce colleges and universities to make various policy changes. "
There is no moral equivalence between those letters and what the Trump regime is doing to universities. Those letters were not followed by the withholding of grants for research, the destruction of NIH, NSF, USAID, and other sources of funding for research. The Obama administration did not trash due process in order to extort pots of money from universities for paying reparations to students allegedly harmed by discrimination. The Obama administration did not set out to reduce the enrollment of foreign students as a way to choke off tuition revenue to universities.
Furthermore, the Obama administration did not make a pretext of pretending to care about Jewish students while running an administration filled from top to bottom by vicious anti-semites -- real ones, i.e. people who hate Jews because they are Jews, not people who criticize Netanyahu.
The reason that the Obama-era "Dear Colleague" letters "did not generate widespread resistance and litigation from university administrators or widespread outcry from college faculty," is because they were not part of a concerted effort to feed universities into the wood-chipper in violation of contracts, laws, and due process.
If you want to use the "Dear Colleague" letters in order to illustrate your point that "The Parties are not Symmetrical," then start with the most significant asymmetry: only one party is trying to destroy American higher education and scientific research, and using thuggish and illegal means to do it.
I think that's pretty close to Matt's point: Democratic conflicts with universities are disagreements between friends, so to speak. There's no real risk of those escalating. Same with Republicans and businesses.
I'm not even sure they were disagreements so much as license. Universities want very badly to racially discriminate in admissions. They also seemed to have a well of people excited about the possibility of presuming men guilty in any remotely bad or messy interaction between the sexes.
That stuff may not have threatened core research functions the way what Trump is doing does but I think it laid the groundwork for the 'two can play at this game' backlash universities are facing. I don't want to engage in a false equivalence but it sucks and we're all going to lose over the long term because of it.
The theory of the Trump administration is that by hurting the scientists, who Trump can directly affect, the scientists will in turn hurt Trump's true targets: university bureaucrats and humanities faculty (who Trump can not directly affect because there is no federal money spigot for them). I don't think this will work, mainly because science faculty are limited in their ability to hurt humanities faculty, and now we are all worse off.
Yea I put the risk of Trump net improving the way these places operate at roughly 0 and the lasting damage on several fronts to be pretty high and hard to recover from in the near term.
This is one of those “stoned dorm room” takes (note: I am neither in a dorm room nor stoned), but the only real solution is that everyone has to care a lot less about higher education in the sense that we agree that it is a, but not the, ladder of social and economic advancement.
Academic study is, and should be, “elitist” in the sense of uniformly demanding a high base level of intellectual ability and discipline - but it needs to also be just one of many pathways to high status. Most people are not academically inclined; that’s totally fine, as long as there are other tracks.
Europe outside of the UK does somewhat better at this in the sense that university is either elite at the front end (hard to get it) or the back end (huge attrition, so only those who are capable persist), while providing a somewhat better spread of vocational options (some countries are better at this than others, of course). As a result, higher ed tends to be somewhat less riven by wokeness and the backlash to it.
The UK opted for mass higher education under Blair as a means of artificially depressing youth unemployment figures, and so is largely in the same mess as the U.S. - although the overall wokeness / backlash situation is still more chill.
Fully agree, but to your point, as long as higher ed is so wound up in our (post war) cultural mythos around equality and meritocracy it will be really hard to disentangle it from partisan politics.
Sometimes I think I have a bit of a unique perspective on places like SB because I'm from a poorer-than-average majority-white place who graduated with a high school class where a majority didn't go to a four year school and a significant percentage went straight to the workforce, and I spend a lot of time socially with people who didn't attend college.
Like, "I went to college and hang out socially with people who didn't" doesn't seem like it should be a rare thing to me, but it's sometimes treated like it is. (See the recent New York Times op-eds expressing genuine shock that there are still people who smoke cigarettes.) I'm not SPECIAL - I would say that this kind of heterodox social circle is more common among the population as a whole than the degrees-only-bubble but a gigantic percentage of the writing and political analysis we get comes from the latter group.
I guess, thinking about it, if I had stayed where I went to school, in those circles, instead of moving back to my modest home metro, then I would have probably ended up in a purely educated bubble myself over the last 20 years.
So, anyway, having all this experience, I don't think people have trouble feeling comfortable about their status without a college degree AT ALL. There is no inherent defensiveness or inferiority complex on the part of the non-college people. Not "only a little bit of one" - NONE. If it comes up, there can be some tension, but as a rule it doesn't come up. I don't think those people lie awake at night thinking about all the opportunities that are being denied to them because they aren't in the professional class.
At the end of the day, "status" is an issue, the "ladder," as you say, but mostly people just want more money - you don't get status with credentials, you get it by having money, friends and a family. People without degrees are mostly more socially depressed because they have less of it, not because their jobs or vocabulary make them feel inferior. Status is not directly linked with economic wellbeing - and, for that matter, mental wellbeing is not directly linked to status - but the correlations are extremely close for most Americans.
The claim was about *net* improvement. It seems obvious to me that there being somewhat less DEI and annoying protests can be more than outweighed by research funding cuts, particularly if a brain drain results.
Also, the universities take a cut of the science grant money for overhead, which includes administration salaries, so turning off the spigot could result in uni admins losing their jobs.
Even if you want those people to lose their jobs is it worth pumping the brakes on scientific research? All but the most MAGA pilled people would say no
I mean I don’t know how much love is lost with bloated college administrations (while tenure-track positions dry up in favor of adjunct roles for professors)
This may be right, but is unfortunately crazy. It seems Trump doesn’t know any scientists. Most of them don’t care what the humanities departments do as long as it doesn’t affect their grad students or labs.
“We’re going to hurt innocent party X to make them hurt Y” is pretty evil. If I were X, I would stand with Y and do whatever I can to hurt the people who are hurting me instead out of principle.
The question is which principle. I think the Democrats need to relearn the value of spite - when they kick you, kick them harder, so maybe they’ll think twice next time.
"I don't think this will work, mainly because science faculty are limited in their ability to hurt humanities faculty, and now we are all worse off."
UChicago recently halted all graduate admissions to their humanities and social sciences programs (which includes economics). I don't have insider info, but the word on the street is that this is precisely the financial ricochet of halted science grants.
I'm not denying that's what you've heard, but I'm not sure it fits. Assuming this list* is mostly comprehensive, you can see that only 15 NIH grants and 9 NSF grants at U. Chicago have been impacted to the tune of ~$15m at most (I think this is overstated - some of them are diversity supplements yet the whole grant amount is listed). The university's cut of that (probably inflated amount) would be about $5m, the hit for which would be spread over multiple years, and that's assuming the PIs just don't turn around and apply for new grants anyway.
I have seen institutions exercise a lot of *caution* because of potential future funding cuts, which might be the reason. I could see them scaling back admissions to more costly programs to have a bigger cushion if the worst does come to pass.
Universities often operate with precarious finances. At UChicago, poor accounting practices and overleveraged debt have created long-lasting repercussions. In an effort to correct course, the university has gone through multiple rounds of layoffs and early retirement offers. While the loss of a relatively small amount of federal grant money may not seem consequential on its own, it compounds a host of other financial pressures and with very bad timing. That said, you’re also likely correct that some of these pauses or cancellations of humanities class intakes are pre-emptive measures.
History never repeats itself perfectly, but this hints at an interesting implication. If a Republican administration seems to be jawboning some favored organization, we should consider that they may be taking sides in an internal conflict.
Sorry, Deadpan, but my point was not about affinity, friendliness, or trust, it was about actions, concrete and illegal actions.
To find an actual morally equivalent case, you have to go back to that time when Elon decided to violate US foreign policy by putting Starlink at Putin’s disposal, so the Biden administration cancelled all federal contracts with Starlink and SpaceX, nationalized all of Elon’s holdings, and left him penniless, only this never happened.
Sure, and this is much closer to the substance of Matt's article. Both parties have reckless, revolutionary factions, but only the Republicans have been captured by theirs.
But Matt's article is not attempting to balance moral scales, he's trying to illuminate a phenomenon that seems to puzzle a lot of observers, including a lot of people in these comments, given the "who's the socialist now?" entries we've been seeing lately.
Agreed. A lot to like in Matt's post _as a warning to progressives to empathize with their opponents_. Also, a whole lot of unreported causal reasoning.
"...disagreements between friends, so to speak. There's no real risk of those escalating. Same with Republicans and businesses."
Outside of the 1.5 trillion US green energy sector and the four trillion US import sector, sure, it's warm friendship 24/7 for US business. There's also the Republican Party's (Trump heads that party after all) highly valuable, free "advice" on branding and marketing. Why, I don't know how Coca-Cola and Cracker Barrel would have survived had Harris defeated Trump!
EDIT: The carbon capture industry is yet another sector benefiting from Trump's warm embrace!
I don't think it's particularly controversial to assert that mainstream Democrats were still supposed to favor affirmative action and gnashed their teeth over the conservative led Asian student Supreme Court case.
Proponents of affirmative action won't own it. It is a deliberate policy of helping one group of people based on color and/or sex and not helping another group of people based on color and/or sex.
And in a world of scarce resources (admission slots, jobs), that means choosing based on color and/or sex. Which is how most people define "discrimination".
People often hold incompatible beliefs, especially when it comes to politics. The idea that people who support the idea of affirmative action simultaneously endorse the types of anti-Asian discrimination carried out by Harvard is kind of silly. Especially when we are talking about normal political partisan.
Oliver pretends that the Obama and Biden administrations explicitly were endorsing and promoting Harvard’s actions, because they didn’t adopt the Republican position on affirmative action. It’s silly.
Are you saying simply that affirmative action is necessarily discrimination against everyone not benefited? Or are you making some more interesting claim about admissions and Asian applicants in particular?
You made a bold claim and present it as inherently true. When you are pressed to show how it is true you assert the absence of evidence confirms your statement.
It’s very simple and is surprising that you don’t see it. It’s the same rhetorical dishonesty Omnicausers use to claim random people are complicit in “genocide” and “Zionism.”
Is your claim that the end goal of the Trump administration is the *destruction* of higher education? Because I do not believe you are right here. I think Trump et al may wreck a lot of that stuff via hamfistedness, but that the goal is universities that aren't overtly anti-Republican or anti-conservative organizations.
And indeed, to the extent we're talking about taxpayer funded public institutions (not Harvard, but state universities), it's pretty hard to justify having them be out there taking explicit political positions as an institution or effectively funding activism for one side in a bunch of US political disputes. It seems like an inevitable part of being dependent on federal funding is that you ought not to be heavily involved in everyday political disputes. It seems like a lot of disciplines have become pretty overtly activist and poltiical in their approach, and it's not hard to see why Republicans aren't interested in funding academic disciplines whose stated goals are basically "everything you guys hate, we love."
Things did get stupid in academia really quickly during the 2010s. The push for “impact and social relevance” combined with social media made everything worse.
University administrations have never been "anti-Republican." The faculty leans heavily liberal, and that's certainly not getting better under Trump. If you thought it was hard being openly conservative at a University, try doing it in an environment where a conservative administration is arbitrarily threatening every single scientist's jobs and research funding. Even the relatively few conservatives I know have become militantly anti-this-administration.
I might go even a bit further. Public universities should have a pro American viewpoint. The purpose of Public schools and public universities should be to educate kids into being full patriotic citizens.
I'm totally ok with public universities firing anti-Western/anti US professors and staff. They shouldn't be employed.
Just like we wouldn't want a white supremacist professor.
I mean this is how we got Enrico Fermi from the Italians, is that they cared about expelling academics based on their beliefs whereas we didn't. I think we were right and the Italians were wrong.
I think it depends if it impacts their research. Like if a chemistry professor also thinks that I, a Jew, should have died at Auschwitz, but is doing cutting-edge work to fuel our economy, I think the university should keep him on payroll. Perhaps he shouldn't teach, though.
And more to the point, the Democratic administrations did not ever try to extort or take over institutions they saw as opposing them. No seizure of oil firms. No disbanding of the Chamber of Commerce or the Business Roundtable.
I know it wasn't Matt's point that the Democrats' and Republicans' actions toward *universities* were in any way symmetrical, but there is *no* Democratic action in any sphere similar to what Trump and the Republicans are doing.
Obama was 100% holding a cessation in funding over the universities here, the difference is in degree rather than in kind: Obama as an institutionalist would have taken a longer and more careful road to cancel funding, and universities kind of wanted to make those changes anyway (they had activist faculty pushing for it already). That said I am 100% opposed to the Trump administrations moves, but I think the correct response is basically to dial back a lot of the Title xxx machinery that he is using (the Department of Education should only be addressing really serious cases of discrimination and not running around inventing new legal systems or policing microaggressions).
This is correct, and since the counterfactual is useful here: if the Trump administration had kept itself to using Obama-administration methods to push more right-coded goals, lots of people would be *unhappy* but it would not have been viewed remotely the same way. (nor would academia have been as sanguine about Obama if he’d used Trump’s approach to achieving his goals)
But I'd argue that this is (1) recent and (2) significantly downstream of the fact that the left-wing thought police have a lot of internal support at universities.
The left-wing thought police got the army involved in forcing desegregation. They eliminated non-profit status for universities that didn't cooperate with their priorities. They expelled the Yale students who protested the Women's Center. They rescinded admission from Harvard admittees who shared the wrong memes.
To get university administration to push right-coded goals they don't support as hard as they have pushed left-coded goals they did support, it is going to take a lot of pressure.
I think it was Eisenhower who got the army involved in forcing desegregation, based on what he saw as his duty to enforce a Supreme Court ruling (a ruling he disagreed with, if I remember correctly).
The entire post reads like someone instructed ChatGPT to make moral equivalence argument between seventy years of Soviet rule and that one time in 2017 the students at Oberlin demanded wage equality in the cafeteria. I gather what Matt is aiming for is a kind of literary "soft-focus" filter that helps us politically-engaged folks understand how things look to 'normal' American voters. But as a literary device, it just leaves me with the feeling that the narrator is unreliable.
"... one time in 2017 the students at Oberlin...."
Ah, an LGM reader, I presume!
Yes, it is of the same genre, though less egregious, than "RFKJr. is firing anyone who understands science, banning vaccines, and destroying the CDC, but Michelle Obama suggested that people could eat vegetables and exercise, so both sides are equally bad!"
I am not disagreeing with your point. One thing I will add is that I read quite a lot of the Dispatch, which is traditionally Regan conservative I would say. They deal mostly in good faith, and all the writers, and comment section, HATE the Dear Colleage Letter.
This whole piece reminds me of the Tyler Cowen quote:
“People in the EU are super wise. You have a meal with some sort of French person who works in Brussels—it’s very impressive. They’re cultured, they have wonderful taste, they understand all these different countries, they know something about Chinese porcelain. And if you lived in a world ruled by them, the growth rate would be negative 1%.”
This doesn't align with my experience. The GMO crazy people are more normie Europeans than the upper class posh type with a classical education Tyler Cowen was talking about.
Yeah! As my former Finnish boss used to like to say in his characteristically pompous style, “as everyone knows, all Germans are perverts [because they go to the sauna nude in mixed-gender groups].”
Do the Germans think the French are perverts, or vice versa? I could see it going either way there. Kind of hilarious that such different people are right next to each other on the map. How did they all manage to live together under Charlemagne.
Back in my Middle East studies days, I learned about the "Triangle of Insults": the worst thing a Persian can call another Persian is an Arab; the worst thing an Arab can call another Arab is a Turk; the worst thing a Turk can call another Turk is a Persian.
Social media is helping to align cultures and politics. There's a push by the European right to Americanize industrial policies plus the culture wars. Maga is very close to Oban in many ways.
French dirigiste traditions do tend to lead to slower growth, but these traditions are very different from other parts of the EU. The EU does not equal northern France.
This analysis was really good, especially the focus on the smallish slice of the tech sector that's driving most of the gains in the market and how insulated that sector is from Trump's policies.
I've read (maybe from noahopinion) that something similar is going on in terms of broader economic investment/growth numbers. It seems that the current AI investment boom is more than offsetting lots of weakness in the rest of the economy and propping up big picture numbers.
For me the key is that there's no rule that market prices have to be "correct" at any time. They just reflect the results of a voting mechanism. They can overprice or underprice risk and be wildly wrong at any time. This is similar to how voters can't judge which candidates will be good for their long-term interests and can massively screw up and elect a president that does material harm to their own welfare.
IMO, that's the scenario we're living through. Personally, I'm convinced Trump's policies and actions will result in US GDP being significantly smaller in 10 years than it would have been had he not been elected. This means stock valuations in 10 years are likely to be a lot lower than they otherwise would have been. That doesn't mean a crash is definitely coming, only that we'll be poorer, less powerful, and maybe less safe in the world than we would have been had the election gone the other way.
There may not be a crash but there could be a lost decade nevertheless. It can just unfold in a less dramatic fashion as gains peter out with an extended period of stagflation.
The big surprise is that the rest of the world didn’t descend into an every-country-for-itself trade war and thus held up relatively well; EU growth is projected to even increase slightly. Foreign stocks (VTIAX) are up over 20%, double the S&P 500.
Yeah. It's interesting to watch this play out. If Trump was more skilled in managing our international relations, we might have seen something closer to the every-man-for-himself scenario play out instead of the "everyone secretly and not so secretly hoping and planning for the US to get what it deserves" scenario we're actually seeing.
IMO, the magnitude of the US animus and distrust Trump created is huge and will have serious costs to the US that are totally separate from the cost of the tariffs alone. Trump has added a very expensive "reckless, unreliable, and untrustworthy trade partner" tax to every deal an American company makes with a foreign one.
One of my worries is that in 20 years, nerds will be pointing to papers showing that the American economy grew by X% less than it should have each year over a decade because of Trump, but without a stark crash, only nerds will notice.
And yet getting on for a year, the market disagrees with you: it sees profits in ten years being higher. Yes, the market can misestimate the future and it will self-correct eventually, but nearly a year of such (imo) misestimation seems to be rather extended.
We're going to be less safe regardless of who is the President because you cannot keep blowing up the debt and expect to increase defense spending but I agree with the rest.
Is the primary driver immigration for GDP slowing? The tariff effects appear modest and reversible. Most r&d is occurring at private companies, not universities.
"Anti-Trumpers often seem to be unaware of what this project even is, but the basic idea is that institutions dominated by the educated professional class in America have become so fatally compromised by 'woke' left-wing ideology that only a cleansing fire can save our civilization. This is clearly not what most people believe or Trump would have won in 2020, Republicans would be leading in the midterms, and his approval rating would be above 50 percent. But it’s a large minority viewpoint that says all this institutional destruction is good for the long-term growth potential of the economy. When Elon Musk talks about the 'woke mind virus,' this is what he’s saying: that the integrity of Bureau of Labor Statistics data is a small matter beside the stakes of rebuilding educational and cultural institutions from the ground up in order to celebrate individualism and meritocracy."
I would clarify that the Musk statement at the end of this passage is only a subset of the sentiment described in the first sentence. Musk might be specifically concerned about the effect the "woke mind virus" has on economic potential, individualism, and meritocracy, but most Trump supporters just want to maintain the cultural supremacy of their tribe (though they may define their tribe differently from one another) and/or stop societal change. As J.D. Vance himself has said rather explicitly, if that requires economic sacrifice rather than fostering economic growth, then that's worth the price. And tribalism certainly has very little to do with individualism or meritocracy.
It was the basis of the big blowup circa January when Musk was fighting with all the anti-Indian people on Twitter. While those folks were ultra-online weirdos, the feelings of the general pro-Trump rank-and-file are more in line with them than it is with Musk. Not to say that all Trump fans are primarily motivated by turbo-racism per se - in fact I'd say a plurality of them are driven mostly by a dislike for contemporary women. For others it's about sexuality, or the Cracker Barrel logo, or wanting the ban the designated hitter (that last one is me, by the way). Point is just that Musk is sort of a weirdo even within MAGA when it comes to his specific concerns.
I'll go ahead and say that the anti-Indian stuff is just a too online thing. Not to say that a lot of Trump supporters aren't generally bigoted, they just haven't given much thought to Indian people one way or another.
IMO the reason it's too online and mostly anonymous is because the ones who are actually in tech and not some random MAGA racists who didn't even go to college, have to face their colleagues at work if they use their real names and there are real consequences for that kind of open racism.
I have a different theory: a whole bunch of the accounts shitting on Indian people aren't coming from the US.
But yeah, ordinary MAGA types living in Arkansas or wherever aren't encountering Indian people on a daily basis at all. Wouldn't even know which slur to use.
Right one advantage of "woke" as a target is that it covers over the divisions between people who think pollution regulations are bad, people who want favors for their own companies, people who want to return to the cultural dominance of their kind, and people who dislike the current culture of educated Americans.
Was going to make this point. I don’t think the MAGA minority is really linking institutional destruction and the long-term growth potential of the economy.
They just want the institutional destruction and to own the libs and to reverse cultural trends. Whatever happens afterward with the economy, happens.
In other words, if the economy is worse off but they see fewer brown people around, they’ll take that trade.
No doubt some of this is true, but most Trump supporters, heck most people in general and many Democrat's mistakenly do not see deficits and tariffs and anti-immigration, and defunding university research as harmful to themselves.
For sure, but my point is that even if they do see the harms they don’t care.
I mean, these are people who think the ideal time in American history was when families lived in small houses on one income with one car and almost never ate at a restaurant. They literally prefer a less dynamic society.
Actually, no they don't. They just think they do. They would make a beeline for the DeLorean to take them back to 2025 a day after being plopped down in 1955.
I feel like a lot of people are missing the important truth that President Vance would be much worse than President Trump. JD is a genuinely villainous ideological authoritarian in ways Trump doesn't even approach.
Sure, but the danger is that Trump's desire for personal power and enrichment is providing cover for Miller/Vance to build a private army/security apparatus that can be wielded after Trump is out of the picture.
Yes, this was a charitable explanation by Matt. There's still a gloss of pro-individualism and pro-meritocracy, and no doubt some segment of the Republican coalition sincerely believes it. But it's already clear that's not where the energy is in the party.
The project with the energy and momentum is "all the stuff Democrats did, but for the opposite groups." Identity politics, hiring discrimination, litmus tests for favoring certain races, genders, religions, lifestyles, political orientations, all of it. Just with the sign flipped on which groups are good and which bad.
And yes, this is extremely stupid and disappointing from a liberal centrist perspective. Horseshoe theory, reversed stupidity is not intelligence, etc. One wishes the backlash to woke would happen on a... more principled? Less idiotically literal? Level. But it didn't and isn't.
I mean, one problem is that if I sell my equities I will be holding American dollars. And I *really* do not trust Trump with the dollar, or with US treasuries. So I end up with a "least bad" option of holding shares of US companies and just praying for the best.
Oh, also all this deficit spending is STILL pushing extra money into the system that has to go somewhere. And it trickles up to the wealthy, who park it in stocks and bonds, so asset prices continue to rise.
Eh. Those foreign accounts are a pain to maintain as a normal individual. Literally buying farmland or timber is also a pain, so I play those through ETFs. Same for crypto actually - and I am very wary of having too much crypto exposure.
Foreign bond funds - maybe I should look more at those? But when I try saying "I'm worried about the US so I moved $ from the S&P to Mexican bonds, to play it safe", it just doesn't sound right.
While information about convenient ETFs to invest in otherwise-opaque or logistically inconvenient sectors or vehicles is always welcome, looking at the 5 year on VTIAX suggests that its value as a play is questionable.
That wasn't what the OP referenced, though. He doesn't want to hold USD or US Treasuries, with the implied reason being tied to devaluation (the USD) or inflation (Treasuries). There are other options, some of which I listed.
Many of the things I listed are not highly correlated to the US stock market.
For Most People in Most situations most of the time, following two rules will leave you in a better shape than the vast preponderance of ppl.
1) Invest in broadly diversified, low or nominal fee index funds/ETFs. Do not pick which individual stocks will be there winners, only pick that there will be a winner. These indexs track relevant market indicators Classic examples are S&P 500 indexes, Total Stock Market Indexes, and International indexes. VOO, SPY, VTI and the like.
2) As a general rule of thumb, equity to bond ratio should be the sum of 100 less your age in equities.
Equities have a higher return over time than bonds, but at higher risk. If you are younger, you have longer for returns to compound and get the upside from any downturn. If you are closer to retirement not losing your pile is just as important as growth.
So if you are 40, then 60/40 stocks (as index funds) to Bonds is a stable and safe ratio. Depending on your age income and risk tolerance you can stand to carry much more than this in equities. But if you are say 60 and nearing retirement, the possibility of an AI bubble scares you more than the additional gains lost.
Bonus #3) Take advantage of a High Yield Savings Account. Rates are likely to come down but you can still get north of 3.5 even north of 4% with some promos at many places. verses basically nonexistent APY % with brick and mortar GSIB banks. Many apps make it super easy to utilize your HYSA functionally as a debit account. I keep 100X in my savings account and then move to my debit account on the same platform only as needed to yield maximum monthly interest payment.
Isn't 30% in bonds for a 30 year old excessive? I'd think it should be 100-0 until, say, 10-15 years out from retirement. (Note that I am also not a financial advisor.)
Most people I work with and most people I know with accounting and finance phds argue that the risk premium is such that you should flip your portfolio to 65% bonds the day you retire and should be 100% equities every day before.
Not financial advice. But the portfolio really holds up for the 20th and now the 21st century
It's a shame there don't seem to be Hungarian, Russian or Turkish members of SB who can give insight into what it's like living through an authoritarian breakthrough. Opinion polls indicate quite a few Israelis are regretting their prior "sure he's corrupt, but at least he fights" votes for Netanyahu.
Israel's had protests, strikes, sit-ins, conscientious objectors, open letters...it'd be wrong to say it's achieved literally nothing but still, to me it shows there's no substitute for winning elections.
Completely agree. I think this is true in Israel and the United States. Since there aren't elections in the West Bank and Gaza, it's much more Kremlinology and internal politicking, but the same principle applies. One gets one political priorities enacted by gaining political power.
With a lot of Trump's gambits there are ways one could see them turning out ok or not bad if he doesn't follow through on the maximalist position. The universities, as Matt points out, are probably the prime example of lefty overreaching that has been bad for the institution. The Brown University deal doesn't seem like it's going to end higher education if that's the model.
That said, there are a lot of moves where the upside is limited and the downside is significant. It seems like the law of averages is all pointing down.
Other than needed federal revenue there's no real plausible upside to Trump's tariffs as currently designed. The RFK Jr stuff is a big health disaster, that may or may not spill over into the narrow economic sphere. The immigration crackdown as designed is bad and could get worse as it spills into legal immigration and international students.
Long term it seems bad for the stock market to disincentivize foreign students from coming to the US. But that’s obviously a problem that’s not being factored in right now
No one is going to be fired on Wall Street in 2025 for failing to accurately predict how big a STEM brain drain crunch will depress future growth 2030.
The thing that seemed to stand out to me was, that I would trust libs to design a public transportation network that was awesome but never be able to build it (protests, protect the turtles etc,) but when it comes to the economy the center left wants me to take the proggies seriously not literally? Definitely crap politics on the right... But I hate the pills the left wants me to feel morally obligated to swallow and virtue signal on, I definitely wouldn't trust them with an estate tax and a whole host of things... And even if they started "saying" the right things who could believe them at this point
Economic performance under a president is rarely the result of their policies alone. Outcomes are driven by long-term debt and business cycles set decades earlier, Federal Reserve policy where interest rates and actions like QE or QT drive growth and inflation, and global factors such as energy prices, supply chains, and pandemics. For example, Clinton benefited from Reagan-era deregulation and the dot-com boom, while Obama inherited the financial crisis but recovered largely due to TARP and Federal Reserve policies implemented during the Bush era. Correlation does not equal causation, and headline numbers under Democrats do not prove ideological superiority... Or that they are the better managers. And to say the " Democrats" is a bit reductionist as well... It's not like there is one economic vision on the left.
The ways that blue states have been "fucking up" are not really partisan at all. Red states exhibit the same anti-change NIMBY sentiments, they just haven't run out of room for new single-family subdivisions yet.
But it's not *not* causation. If it keeps happening and happening at some point you go "hmm." I suspect that by 2029 we'll be saying, "yup, another poor economic performance under a Republican President. Keeps happening for some mysterious reason."
I really hate this talking point because it leans into the concept of the president as the only important person in the country. Does it matter if Congress was Republican/Democrat at the time? If I told you that unified Republican congresses had better economic performance than Democratic congresses, would that sway you in some way?
The economy is driven primarily by where we are in the business and credit cycle, by Federal Reserve policy, and by global shocks. Party control at the White House or in Congress matters at the margins but not nearly as much as people assume, and using party labels as a scoreboard mistakes timing for management. Presidents inherit expansions or recessions in progress. Reagan inherited high inflation and a Volcker tightening. Clinton benefited from a peace dividend and an IT productivity surge. Obama inherited a banking panic already being stabilized by TARP and an extraordinary Federal Reserve. Trump inherited a long expansion and then faced a pandemic. Biden inherited a pandemic rebound with unprecedented fiscal and monetary stimulus already in place. You cannot cleanly assign outcomes without adjusting for the starting point. The Federal Reserve has been the dominant macroeconomic lever since the 1980s, using interest rates and balance sheet policies like quantitative easing and quantitative tightening to drive inflation, unemployment, and asset prices. Oil spikes, pandemics, wars, China’s integration into global trade, and demographic shifts often swamp the effect size of typical tax or spending adjustments. Major fiscal policies usually arrive late in the cycle or are diluted by divided government, which makes it easy to credit the wrong party when lagged effects finally show up.
Some studies do find higher headline growth under Democratic presidents, but those same studies show that the gap is largely explained by timing luck and external shocks. Early cycle rebounds tend to occur when Democrats happen to be in office, while late cycle slowdowns and oil shocks often align with Republican presidencies. Repetition does not create causation when the underlying driver is cyclical position. Better metrics than raw GDP or the stock market include real median wages, labor force participation, and cost of living adjustments. A high nominal income in a blue state does not automatically translate into higher real purchasing power if housing and service costs are extreme. Volatility also matters. A party could preside over higher average growth simply by having bigger booms and busts. Administrative capacity is another key measure, reflected in permitting speed, infrastructure costs per mile, and project delivery timelines, all of which often tell you more about competence than a national GDP print.
Comparing states with red or blue trifectas can be useful but only if we compare like with like. Blue megastates such as California, New York, and Illinois house superstar cities and sectors that drive GDP per worker, but they also struggle with extreme housing scarcity, very high infrastructure costs, and governance challenges that slow project delivery. These dynamics produce high nominal output but also chronic out-migration to cheaper regions. Red growth states such as Texas, Florida, Utah, Tennessee, and the Carolinas have lower costs, faster population and job growth, and generally friendlier permitting, but they also tend to spend less on safety nets and sometimes produce weaker outcomes on services that are difficult to compare across populations. Both patterns can be true at once. High output in a few blue hubs does not prove partisan management superiority, and fast job and population growth in red states does not prove partisan perfection. Cost structure, regulatory environment, and administrative capacity matter more than party branding.
There are clear examples of what works regardless of party. Expanding housing supply and reforming land use rules reduce rent seeking and improve affordability. Faster and simpler permitting with predictable timelines lowers costs and encourages investment. Targeted public investment delivered at world-standard costs can raise productivity. Tax policy should target genuine windfalls while minimizing avoidance and administrative burden, such as limiting step up in basis for very large unrealized gains while protecting operating businesses and family farms with clear liquidity rules. A steady macroeconomic policy that avoids overheating and sudden fiscal cliffs benefits everyone.
Patterns that appear to favor one party are not necessarily proof of management skill. If one party more often takes office near the end of expansions or just before oil shocks, it will end up “owning” slowdowns it did not cause. If the other party more often takes office at the bottom of cycles, it will “own” rebounds that were already in motion because of the Federal Reserve and broader market forces. The right question is not who happens to be in office when a quarterly GDP print lands. The right question is which party designs institutions and policies that keep costs under control, deliver projects effectively, and sustain real income growth across a full business cycle. If you want to judge competence, look at cost-adjusted incomes, volatility, delivery capacity, housing supply, and permitting speed. These are the levers that actually drive living standards, and they cut across party lines. There are a lot of other levers that are probably better examples of this as well.
Obama’s recovery is oversold as a Democratic success story. The biggest drivers were TARP and bank rescues designed under Bush, massive Federal Reserve intervention through quantitative easing and zero interest rates, and global macro forces like collapsing energy prices and capital inflows. Obama’s stimulus helped in the short term, but the long-run rebound was powered mostly by policy and market dynamics outside the White House... I do think Obama's one of the best presidents we will ever have though for what that's worth.
I’m a little confused here. The estate tax exists now and only applies to estates of $14M for individuals. Is this something you are actually worried about for yourself?
People defending the estate tax is the worst case of “temporarily embarrassed millionaire-itis” ever. Who is going to be able to leave $14M to their kids (or more realistically grandkids) and thinks that’s a good idea that won’t mean you left a lot of happiness on the table in life and won’t just completely corrupt your kids? I am a millionaire and that seems absurd. “The man who dies rich dies disgraced.” -Andrew Carnegie.
The estate tax is the best form of tax, it hits completely unearned money overwhelmingly held by the super-rich, and we should rely on it as much as possible.
Carnegie’s quote is fine but that is not really how modern wealth transfer works. The current estate tax hits less than 0.1 percent of estates and raises only about half a percent of federal revenue. If the goal is reducing dynastic wealth there are better tools like ending step up in basis on huge unrealized gains rather than relying on a tax that mostly drives avoidance behavior and expensive planning strategies.
The step-up is very distorting. There are elderly people sitting on multimillion dollar homes way too big for them, but as part of estate planning it's better to wait until they die so it can be passed down to their kids without a giant capital gains tax.
I will never have $14 million in real 2025 dollars unless I win the lottery, but I consider the estate tax to be genuinely evil. Income tax, capital gains, property tax, and sales tax all somewhat semi-plausibly map and scale to costs of government services provided in connection with what generates those tax revenues. There is, however, no reason for death to be a taxable event beyond what's needed to process a death certificate and a few other minor administrative matters as the vast majority of governmental costs associated with a death, e.g., police and emergency services, probate courts, etc., are already covered by other taxes or are paid for directly by the estate/heirs.
But it seems logical that estate taxes map to all those things, since accumulated wealth is just the accumulation of incomes, capital, properties, etc..?
Under that framework, it may be a "double tax", but it still plausibly maps to government services. And since, as Nikuraga says, it's "completely unearned money" from any heir's POV, I'm fine with that doubling.
Well, yes, that is indeed double taxation. The money may be "completely unearned money" from the heirs' POV, but the assets were already earned and taxed when it was the decedent's and it's the decedent who is deciding how to dispose of the estate, not the heirs. (If you want to get rid of the step-up basis for capital gains taxes for when heirs sell assets they inherited, I think that's reasonable since if we assume that the decedent was instead immortal, they would have had to pay taxes on the original basis when they eventually sold the asset.)
I'm curious why you think double taxation is immoral or evil then? If we already assume the right for the government to tax once, what is it that makes it wrong to do it a second time at this specific life event? Especially if we assume that the taxes do have to come from somewhere, so we're not looking for a "good" options, so much as we're searching for the "least evil" option.
" but the assets were already earned..." And protected by the systems so that some of it can pass down to heirs. The idea that someone who has all this wealth does not rely on the overall system working for them is absurd. The idea that taxes are too high is a rightist dream of having their cake and eating it too. When you die with a large estate while the budget wasn't balanced, you are passing on debt to your children and their kids. And everyone else.
Genuinely evil is interesting framing. Not "necessary evil" or "unavoidable evil", but "genuinely evil". I'm curious what else you find to be genuinely evil. Taxation on capital gains?
Lack of indexing for inflation is my biggest objection to capital gains tax (a position Al Franken shared at one time at least), but it's not in the same category of immorality as the estate tax.
As I noted in response to someone else, I would be fine with abolishing step-up basis because, if we imagined the decedent was immortal instead, they would eventually pay capital gains on the increased value, so there's not an issue from my perspective there.
But taxing inheritances as income for heirs, with a generous deductible amount, makes sense. The tax on the estate itself is bad as is. It should just be income tax, or at the very least there should be no step-up in basis for transferred stock.
Of course, at this level a lot of these estates go into trusts that pay their own taxes, of which beneficiaries receive untaxed distributions. They probably should be taxed as inheritance income prior to going into the trust, but these trusts are usually created prior to death, so it can become a sticky wicket about which a CPA like you knows more than I.
Why should a poor man's child have to pay more in taxes on their income than a rich man's son just because the former labors for it while the latter inherits? Is labor less important to society than inheritance that we would penalize it more with greater taxes?
"Inheritance isn't income" - you're making an definitional distinction. Its money gained.
The income for the poor man was already taxed as well! He earned it from a man who paid taxes on his income before buying something from the poor man who then paid taxes on his income.
But let me rephrase the question to suit you better -
A very simple example:
Abe is poor man who leaves his son Bill no inheritance. Bill works hard in his life and earns $3 million dollars of which he pays income taxes.
Charles is a rich man and leaves his son Dave 3 million dollars in inheritance. Dave lives on that $3 million dollars for his whole life and pays no taxes.
All other sales, property, etc. taxes are the same.
The government to function needs to raise 900k between them over their life. If they split those taxes then each would pay 450k and have 2.55 million left. If Dave doesn't pay any inheritance tax, then to raise the same revenue the tax that Bill pays is 900k leaving him with 2.1 million and he's paying 30% instead of 15%.
Why should we penalize Bill by making him pay more taxes so that Dave doesn't have to?
Taxing unearned money overwhelmingly held by the super rich is good, but the estate tax has a very poor form. Right now if you leave $100m to 1 person it receives the same tax as if the fortune were divided among 200 people, and to me that's crazy. It shouldn't be administered on the estate, but as income to heirs (perhaps with a standard deduction). If you divide your 100m fortune equally among 200 people, you should avoid estate taxation, because everyone only got $500k. We should encourage equal division of assets and Eliot Rosewater type behavior. Billionaires are bad but we should make more millionaires.
I'm okay with the estate tax but I strongly resist calls that it's perfect or great because I don't trust the politicians to leave it where it is and instead decide to start turning down the screws.
It’s embarrassing to even say something like “ugh it’s such a pain in the ass to figure out an inherited IRA” no matter how true it is, let alone “that fucking estate tax
I don't understand why this is lazy framing. Either you are worried about the estate tax in some kind of generalized sense, or you are worried about it personally. I asked which one it is for you, specifically. What's lazy or framing about that?
Here’s why “are you worried about it personally or in general” is lazy framing no matter what team you are on:
1. It is a false dilemma. It forces a binary that excludes the many legitimate reasons someone can care about a policy that are neither purely personal nor purely abstract. Incentives, spillovers, administrative capacity, and effects on charities or family businesses are all valid concerns even if you never pay the tax.
2. It is a circumstantial ad hominem. The truth of a claim does not depend on the speaker’s balance sheet. “Show me your net worth” is a way to dismiss the argument by implying bias rather than engaging the substance.
3. It privatizes a public policy debate. Good arguments rest on mechanisms and evidence, not on the disclosure of private financials in a public thread. Demanding disclosure chills speech and selects for people who are comfortable self-doxxing rather than people with the best ideas.
4. It confuses conflict of interest with relevance. Disclosure can matter for officeholders or expert witnesses. It is not a prerequisite for citizens to discuss tax design.
5. It ignores indirect exposure. Thresholds move, local property values rise, liquidity rules matter, avoidance markets impose costs, and charitable giving shifts. You can be materially affected even if you are not above today’s cutoff.
6. It substitutes identity for analysis. The real questions are goals, mechanisms, tradeoffs, and guardrails. Personal exposure does not answer any of those.
7. It fails the consistency test across issues. We would not say “you cannot argue about school policy unless you have kids,” or “you cannot argue about corporate tax unless you own a C-corp,” or “you cannot argue about environmental policy unless your house is on the coast.” Same logic here.
8. It lowers debate quality. When threads move to gotchas about who benefits, people stop talking about leakage, revenue yield, step up in basis, liquidity protections for operating businesses, and compliance cost. Those are the parts that actually determine whether a policy works.
A better frame for any tax debate:
• What is the goal we are trying to hit
• What mechanism achieves it with the least distortion
• What are the administrative and compliance costs
• What guardrails protect small and illiquid enterprises
• How will we measure success and revise if it underperforms
This is rather a lot of text to explain that you aren't going to answer the question. Very well. This whole discussion came about because you launched into a statement of "trust" in Democrats, which has nothing to do with the bullet points at the end. I don't see how any of the text above gets at the trust part of the equation.
Trust is about incentives, not intentions. The reason I am skeptical of Democrats on taxation is that their coalition includes highly active factions that openly advocate for very aggressive wealth redistribution, including 70 to 90 percent marginal rates, annual wealth taxes, and even 100 percent estate taxes. You can find these proposals in academic papers, on activist platforms, and from influential think tanks like the Roosevelt Institute, Data for Progress, and the People’s Policy Project. Even if these ideas do not become law tomorrow, they shape the boundaries of what the party treats as “reasonable” in negotiations.
The estate tax is a good example. Right now it applies above $13.6 million per person, but that threshold is scheduled to drop by half in 2026 unless Congress acts. There are already progressive proposals circulating to lower thresholds further, remove liquidity protections for family businesses, and even pair an estate tax with an annual wealth tax. Given these pressures, it is rational to pay attention to where the coalition wants to go, not just where the law sits today.
So it is not about believing Democrats plan to confiscate everything tomorrow. It is about looking at the coalition dynamics, the activist energy, and the policy pipelines and asking whether this is a party capable of resisting its most extreme voices when margins get narrow. Based on recent patterns, I do not think they have earned that trust.
I suspect he meant that he wouldn't trust them with an expanded estate tax. (I'm pretty sure I've seen commenters *here* who say they would support a 100% estate tax.)
It is hard to trust Democrats on major policy issues when there is not a stable or unified economic vision inside the party. The coalition swings from moderates who want incremental reforms to far left activists openly calling for things like a 100 percent estate tax, and in places like mine you hear proposals that sound completely detached from any workable reality. Thresholds shift, incentives change, and those far left ideas often end up driving the debate inside liberal strongholds. Without a coherent framework or a clear sense of limits, how can anyone feel comfortable putting the entire economic agenda in the hands of that kind of chaos?
Can you actually name a far left activist who has any real power over the federal laws governing the estate tax? If anything, the carveouts and cutoffs for estate taxes keep going up and up. I think you can probably relax on this front. Also, I'm surprised to hear someone discussing the Democratic party as the ones who have no sense of limits.
The problem is not naming a single far left activist with statutory power. It is how the Democratic coalition is structured and who sets the agenda. Patrick Ruffini’s work shows that Democrats are increasingly anchored in highly educated, metropolitan voters and donor networks whose preferences are well to the left of median voters on taxation and regulation. David Shor’s research on popularism finds the same gap between activist priorities and broadly popular economic policy, which produces messaging and staff work that outpaces what elected officials can credibly deliver. Frances Lee’s research on Congress shows that narrow coalitional majorities force parties to govern through internal bargains and agency delegation rather than coherent programs, which is exactly when factional priorities bleed into policy design.
You can see the competence issue in real-world outcomes. Blue jurisdictions that dominate the Democratic coalition have the highest costs and worst delivery records on big projects anywhere in the developed world, with transit construction costs several times European norms and long delays tied to legal process and fragmented governance. That record does not inspire confidence on complex nationwide economic policy. On taxation, the federal estate tax raises only a tiny share of revenue while generating large avoidance industries and planning costs. That is why many center-left economists favor alternatives like limiting step up in basis on very large unrealized gains, which would reduce dynastic wealth concentration more effectively without creating the same distortions. The point is not that Democrats secretly plan a confiscatory tax tomorrow. It is that the coalition’s incentive structure, donor pressure, and administrative style produce a consistent pattern of maximalist rhetoric, muddled follow-through, and high implementation costs.
So my skepticism is policy based. If the party demonstrates consistent competence on cost control, delivery, and evidence-backed tax design that targets genuine windfalls without generating large deadweight losses, I am open to revisiting my position. But Democrats are not even in the running to win national power, so this fantasy conversation of what they might do is somewhat laughable.
Eliminating the step-up in basis makes sense. Though how do people even know what their basis is on inherited stock? I guess Vanguard or Schwab just keeps track of that?
I feel pretty bad about Republicans right now. There is no question that a large part of the party has gone off the rails, and that makes them very hard to trust with national power at the moment. But just because we have a complete mess on one side does not mean Democrats should take voters like me for granted. If Democrats assume they can do whatever they want simply because the other side is dysfunctional, they risk alienating the very people they need to build a durable coalition. If they push aggressive policies under a bad auspice, I am gone as soon as the other side gets its act together.
And here is the deeper problem: Democrats keep saying that “democracy is at stake,” but their behavior rarely matches the rhetoric. If the threat is truly existential, then almost none of these activist-driven pet policies should be the priority. The focus should be on defending core democratic institutions, building durable trust across factions, and broadening the coalition to win convincingly. Instead, what we see looks constrained by the same old playbook — chasing donor network incentives, cultural signaling, and activist wishlists — even when those moves are polarizing and weaken their ability to govern. Cultural gravity inside the coalition is strong, and it seems very hard for Democrats to escape orbit and do something fundamentally different that matches the stakes they describe.
If Democrats actually want to build a sustainable governing majority, they need to focus on long-term priorities that improve delivery, cost control, and institutional competence. That means advancing policies that are broadly popular, economically sound, and administratively feasible instead of constantly catering to the loudest factions. Every party has extremes that make unreasonable asks, but leadership matters when it comes to telling your fringes to pound sand. That is exactly what many of us wish Republicans would do with their far right, and Democrats need to show they can manage their far left with the same discipline.
The other piece here is trust. Democrats control some of the richest, most dynamic states and cities in the country, yet they also have the highest housing costs, the most expensive infrastructure projects in the developed world, and delivery timelines that lag far behind global peers. That record makes it hard to trust the coalition with even more expansive economic authority, especially when there is no unified framework for how to execute policy effectively. Good governance requires designing programs that work, delivering them at reasonable cost, and adjusting when unintended consequences arise. Without that, promises are just slogans.
So yes, I am frustrated with Republicans right now, but that does not give Democrats a free pass. If they want to earn durable trust, they need to behave like they believe the stakes they keep talking about. That means building a coalition focused on practical, evidence-based solutions, resisting performative policymaking, and demonstrating they can govern effectively at scale. Otherwise, they risk driving independents and moderates away the moment the other side stops losing its mind.
Another critical piece of institution-building is addressing voter disillusionment directly. Offering policies that large portions of the electorate do not want only deepens polarization and distrust, which makes it harder to unify the country and much harder to believe the institutional arguments Democrats often espouse. If a party claims to be defending democratic norms, then it has to focus on policies that broaden legitimacy and strengthen trust rather than alienate people further. Ignoring that dynamic undermines the very institutional credibility they rely on when making the “democracy is at stake” case.
Bro, I guarantee you the estate tax cutoff is well down the list of priorities for swing voters. I genuinely don't think it matters at all as far as persuading voters. Maybe large donors, but certainly not the average joe.
Because it is the only meaningful alternative to becoming a giant version of Orban's Hungary, except without life support from EU subsidies and with the rules of the road enforced by a bunch of masked, Christian-Nationalist-tattooed ICEmen who couldn't make the cut for other federal agencies or metropolitan police forces? It is not exactly like the alternative is Romney or Brian Kemp or Nikki Haley.
I'm for the estate tax because I believe in America. Inherited wealth and dynasties and aristocracies are un-American. The estate tax is one of the great things about America, since it works to destroy unearned inherited wealth and disrupt dynasties and aristocratic privilege.
I'm against the estate tax because I believe in America. Being able to keep what you've earned and pass it along to your children with minimal state interference is one of the greatest things about the country. It's hardly unnoticed that one of the very common features of tyrants in history is orchestrating the jailing and/or execution of their opponents on flimsy pretenses and then seizing the victims' assets for the state. It seems bizarre to claim that dispensing with the first part while keeping the second would be a great accomplishment for society.
I agree with everything but the estate tax. Are you worried they'd break up large companies when their founders die or something? The estate tax seems to be one of the least bad taxes out there.
There are better alternatives that economists across the spectrum, including many on the center-left, have advocated for years. That would directly address wealth concentration without forcing massive compliance costs on everyone else or destabilizing business continuity. Things like tecipient-based inheritance tax that focuses on windfalls at the individual level rather than punishing capital that has already been taxed once. Both othese approaches are more targeted, less distortionary, and far easier to administer than constantly ratcheting up the estate tax.
So it isn’t about defending dynastic wealth, and it’s not about rejecting all taxation. It’s about whether the estate tax, as designed today and as envisioned by some of the most vocal factions pushing for expansion, actually achieves its stated goals without causing disproportionate economic disruption. When you look closely at the yield, the compliance burden, and the kinds of policy packages being debated, I think calling it “one of the least bad taxes” oversimplifies a much more complicated tradeoff.
"When progressives talk about the need to 'break up big tech,' how America is an 'oligarchy,' and how 'billionaires should not exist,' they are heard in the business world as saying that the United States should be more like Europe, where the largest companies have market caps that are less than one-tenth of the largest American companies. I feel like purely partisan Democrats, like my Politix co-host Brian Beutler or even Krugman, don’t think seriously enough about the meaning of this. Whatever you make of comparisons between the United States and Europe, it’s indisputable that the value of shares of stock in our companies is a lot higher — more or less by definition that’s what happens when Europe does not have big successful companies like we do."
I agree with this analysis, as well as the critique of progressive economic messaging that follows. That said, I am 100% certain that an America run by liberal Democrats would continue to be far more successful than Europe would be if it were run by Republicans. Even if the worst progressive policies were implemented, we'd still be a very large country that attracted the best and the brightest from all over the world. The main reason why Europe is sclerotic is that these are all basically small ethnostates. Yes some of them have brought in a lot of immigrants, but the basis for their existence remains the fact that they're homelands for certain ethnicities, and countries like that are just not going to be able to compete with a country where the best of all mankind come to play against each other on the same field. Maybe if you have a billion people, but otherwise not.
Market cap means shareholders get rich, but is not necessarily a good thing for the rest of the economy. It could just reflect large profit margins and rent-seeking. Tesla has 8x the market cap of BYD but BYD sells more cars and is growing its sales more. It just has lower margins so the value goes to consumers instead of shareholders.
I get your big picture point, but imo Tesla is a sort of lousy example.
At this point, Tesla is a meme stock and its valuation doesn't have much to do with its car business. It's all based on its future prospects with AI and autonomous driving. Heck, I think without CAFE credits, Tesla would be operating near breakeven or even at a loss. IMO that's likely what the future holds for them.
So while I get your point about rent-seeking and large profit margins, I don't think that's what's going on with Tesla. They're more an example of the stock market as a casino.
TSLA as a stock contains a car company and also a number of options (in the financial sense). These options include its forays into AI, Robotics, Autonomous Driving, Robotaxis, possible future EV mandates, some Elon-specific unknown possibilities. Those options drive its value more than the current car company does.
Likewise with BYD. Though the non-vehicle options there include more negative value options due to the structure, standing and behavior of the Chinese Communist Party.
There's also a mechanical financial issue here, which is that BYD (like most Chinese companies) is dual listed in Shenzhen and Hong Kong, and the Shenzhen shares are not freely tradable by international investors, while domestic investors are pouring money into those shares. There is persistent fear that the H shares (traded in Hong Kong), while technically legally equivalent, are implicitly a long term investment in the continued existence of Hong Kong's separate legal and financial status, which results in them being depressed relative to mainland shares.
Also, don't a lot of folks' home solar setups use TSLA batteries for storage?
Speaking of which, maybe there's at least one silver lining in about Trump getting rid of renewable incentives - the end of the incessant, pushy, door-to-door home solar salespeople. grrrrrr
That’s true (and also not good for consumers) but it also reflects an expectation that if Tesla is able to crack autonomous driving it’ll be able to earn large profits from it, rather than have them competed away or open-source things.
Biggest handicap for Europe is the lack of a common capital market. Each country having their own little stock exchange is holding them back. They know it but won’t do anything about it
"...rebuilding educational and cultural institutions from the ground up in order to celebrate individualism and meritocracy."
Individualism. Meritocracy.
/looks at the collection of sycophants, lickspittles and toadies Trump has elevated to positions of power, not to mention the glorious celebration of individualistic meritocracy evidenced by GOP Senators and Congresspeople today
/blinks slowly several times
/brain short-circuits trying to decide whether to laugh hysterically or burst out sobbing
I think today is a day when, for my own sanity, I need to stay away. I've got lots of work to catch up on before drosophilist jr. is born in any case, have fun everyone, I'll see you all tomorrow.
My one consolation is that the true MAGA believers who worship Trump for bringing back "individualism" and "meritocracy" 🤮🤮🤮🤮🤮🤮are outnumbered by disengaged normie voters who don't pay attention to the stock market but who do notice that a jar of instant coffee that used to cost $7 at target in November now costs $11, and are pissed off about it.
- Think you’re underrating the fact that summer and specifically August might be the worst time whether to judge if the stock market is accurately reflecting underlying conditions in the economy. In my office, I half joke that we should take bets on how far the market will go down on day after Labor Day. Reason being a whole bunch of Hedge Fund managers are vacationing in the Hamptons and day after Labor Day a bunch of them are cycling out of whatever positions they are in now that they are back in office. This specific idea is half baked and kind of in jest. But post Labor Day sell off is a real thing. And I do actually think there is something to be said for the idea at that the summer is much more reflective of “retail” investor activity then rest of the year.
- think you’re underselling that in your own post you show Trump’s actions are really only good for the “Magnificent 7”. These companies are holding up the market now but how long can that last. Every day seems to be another story of a business owner who didn’t realize their business would be severely impacted by tariffs (think we underestimate how many small business owners don’t understand the big picture of how their business actually works). There a lot of signs that businesses have held off price increases but are at a breaking point and will have no choice soon.
I think point being you’re really underselling possibility we’re at the calm before the storm here.
100% if I was more inclined to be a risk taking investor. In general, I'm pretty on board with the invest most of your money in index funds strategy. While I think the scenario I laid out is genuinely likely, do I know the market downturn will happen next week, next month, next 3 months (as I noted about Labor day, Dow futures show market opening down, but besides the fact that I'd almost never take one day movement in stocks as indicative of anything, I laid out banal reason stocks may go down today)? If you look at that Krugman post, the data he has (and links) indicate there were warning signs a good 1-2 years out from the day when Lehman collapsed.
And of course the other factor is as Matt laid out, Trump is a lunatic who may actually turn on a dime if stock market really starts to plunge. Do I really want to have a put option for say September 20th, watch market tank next two weeks and then watch Trump completely reverse himself on the 19th in response because this absolutely something he might do? Again, I think a lot of his tariff back and forth stuff is pretty baked in to the short and medium term economy (how do you make any investment decisions, how do you know Trump won't reverse himself again like he did this summer if market goes back up again. There's just no way this doesn't have some sort of impact). But in theory markets are forward looking, if he does reverse himself in like two weeks, markets booming again is not that irrational.
Also, it seems pretty clear Trump had some sort of medical issue the last 3-4 days. The "Trump's dead" stuff was absurd from the beginning (there's just no way to cover that up for than an hour or so), but the lack of public appearance, the only picture being a grainy one far way, the various photos of him golfing on the weekend which were actually taken weeks or months prior, just tells me the "Occom's razor" explanation is he had some sort of episode requiring serious medical attention. Point being, I don't think it's progressive "hopium" to say there may be a serious medical concern going on with Trump right now. How do you price that in to a trade?
I call BS. You could spend a modest sum of a couple hundred to a couple of grand betting on your theory and get a nice chunk of change without taking a bunch of risk to your overall financial health. I don’t think you really believe it, which is why you won’t make the bet and get free money to buy a nice dinner or ten.
Downvote. There are all sorts of investments I personally don't make no matter how promising the return looks because the time/expense of trying to figure out how to do it in the first place combined with the tax implications don't make it worthwhile from my perspective for the small dollar amount I'd be likely to earn.
Could also be a lack of know how. I have to idea how to “make some puts” and I’m not sure my meager investment account even allows me to do that kind of trading. I see that I can buy and sell stocks and index funds and what not. No clue how I would actually make a bet on anything other than buying a stock I thought would go up or selling one I owned if I thought it would go down. That may not be Colin’s problem but it would certainly be mine!
I would say I've been somewhat vindicated today so far looking at the market. But god only knows what happens after 2 PM. I'll reiterate that while I don't believe the "Trump's dying imminently" stuff, I do think there is a real question as to his health. If after 2, there's even more questions about Trump's health there is actually a base case that stocks soar. There's almost certainly a "mad king" premium built into inflation expectations and volatility generally. If there is any indication that Trump really is in serious trouble and that Vance might be taking over sooner rather than later, that's actually a strong case that inflation expectations may come down, 10-year goes down and stocks soar on possibility of rate cuts purely because even if Vance continues some of Trump's tariff policy, he's not actually an insane person likely to whipsaw on tariffs one day to the next based on something he saw on Fox News.
Now to me mostly likely scenario Trump is going to look worse for wear due to some sort of weekend medical operation but still look and sound himself and we'll all move on to whatever new crazy thing he wants to next (likely put National guard in Chicago). But my point is tail risk. Call options are risky as anything. With "naked" calls, your downside risk is enormous. I'm not going to put my life savings at risk even if that risk is only like 5%.
Yes, the "lack of know how" was what I was referring to about the time/expense trying to figure out do it in the first place. For example, I know what shorting a stock is, but I have no clue offhand how I would do that and I don't even have a brokerage account. So while, for example, I might see a horrible news story about a company where it seems really likely that its stock price will drop in the next 24 hours, I'm not in any sort of position to exploit that, and that's even before getting into the question of whether I could make enough on such a deal to compensate for the resulting complications in my taxes.
How does one even do instantaneous trades anyway? I've been burned, not heavily - just didn't end up making anything when I would have if the transactions had gone through when I wanted them to - trying to time dips and bouncebacks. My investment accounts just take forever to sell and buy stuff. But it's a big stodgy firm that mostly does mutual fund retirement accounts, which was what I was working with.
Caveat that one day moves in the market vast majority of the time not indicative of anything medium to long term.
But from AI (again take with a grain of salt):
Yes, trading is often lighter in August compared to the rest of the year, although this is more of a historical trend than an absolute rule. This phenomenon is sometimes referred to as the "summer doldrums".
Several factors contribute to this pattern:
Summer vacations: Many institutional traders and other market professionals in the US and Europe take vacations during July and August. With fewer active buyers and sellers, trading volumes and overall market activity tend to decline.
Reduced market catalysts: The summer is generally a quieter period for market-moving events. Major quarterly earnings season has passed, and major economic reports or central bank decisions may be less frequent. This relative lack of news gives traders less incentive to make significant moves.
Impact on volatility: Because there is less trading volume, large price swings can occur more easily, as a smaller amount of capital is needed to move the market. These movements are not always indicative of a new trend but can signal a "false break". Volatility, as measured by the VIX index, has also historically tended to rise in August.
Caveat that one day moves in the market vast majority of the time not indicative of anything medium to long term.
But from AI (again take with a grain of salt):
Yes, trading is often lighter in August compared to the rest of the year, although this is more of a historical trend than an absolute rule. This phenomenon is sometimes referred to as the "summer doldrums".
Several factors contribute to this pattern:
Summer vacations: Many institutional traders and other market professionals in the US and Europe take vacations during July and August. With fewer active buyers and sellers, trading volumes and overall market activity tend to decline.
Reduced market catalysts: The summer is generally a quieter period for market-moving events. Major quarterly earnings season has passed, and major economic reports or central bank decisions may be less frequent. This relative lack of news gives traders less incentive to make significant moves.
Impact on volatility: Because there is less trading volume, large price swings can occur more easily, as a smaller amount of capital is needed to move the market. These movements are not always indicative of a new trend but can signal a "false break". Volatility, as measured by the VIX index, has also historically tended to rise in August.
On the Magnificent 7 point, in a lot of ways it sounds like we're turning into Europe in the sense that a handful of companies drive economic activity. At least Nordic countries have the excuse that they have small populations, so any Nordic multinational is by definition going to account for a large share of GDP.
I mean not having a great understanding of your business' supply chain I think supports my contention.
I don't say that to be like business owners are somehow stupid or don't know anything at all about their business. If they survived some length of time as a going concern, going to give the benefit of the doubt that you know something about how your business operates. But I do think if you read news articles there's often a lot of interviews with small business owners about how some new tax will effect their business or how some new regulation will impact them. And I think we should probably treat these anecdotes with a grain of salt.
A lot of weird false equivalence here. But that aside count me in for wanting more technical economic writing! Only so many posts on how the democrats need to moderate that I can read.
I made this point last year and I'm trying to remember the example I had used, but I think Democrats sometimes needlessly antagonize business. To be clear, Americans are NOT libertarians, and have zero qualms about regulating business in heavy handed and stupid ways (like Trump is wont to do) IF there's an obvious reason to do so. I have yet to see the upper bound on what sort of minimum wage hikes the public will support. The public is a big fan of "force my employer to pay for stuff for me." They think that's free, and obviously it isn't, so policymakers have to be careful with that dynamic. BUT, what does NOT follow is that Americans are just hostile to business in general. I remember what it was now, the "break up Amazon" thing. Nobody cares about that. All threatening to break up Amazon did was frighten Amazon. Nobody was energized to vote by the prospect of breaking up Amazon.
Democrats COULD pick up a decent chunk of the business community if they wanted to. They don't need to say "we'll give you a bunch of tax breaks and legalize pollution." They just need to convincingly declare that they're better for economic stability than the alternative and that all they want to do is enforce basic environmental and labor laws, and that any business that is in line with those doesn't have anything to fear. Problem is that it would take a while to earn that type of trust, because when they're in power, they kick business for no reason or at least threaten to.
Tesla is a great example. They were endlessly harassed by the Biden administration because they aren’t unionized. Some of it was legit, but it was the kind of stuff I’m sure also happening at the big 3 but not a priority for Biden because of his attempts at union support.
Financial services is another one. JPM and others were just endlessly harassed by the regulators last time around despite doing the administration favor after favor. Jamie Dimon fucking hayes Trump, by all evidence Trump hates bankers, but he’s still by some distance the lesser evil because you don’t have a ton of dim and vicious Warren acolytes trying to fine you 2 billion dollars because your loan book is 12% African American and not 13%.
Democrats, unfortunately, don't have a central animating figure who can excommunicate the neo-Brandeisian psychos, and so there is nothing "the Democrats" can do to prevent those people from saying they want to destroy all large companies while also being Democrats.
It's gonna be a big tent that includes some full blown socialists, but whoever gets elected next doesn't need to wage a low level war on mostly popular companies for no reason.
I just wish Seattle would stop pissing away some of the greatest blessings any city has ever been fortunate to have by unnecessary antagonizing business. I just hope the draw of the natural beauty and quality of life is enough to keep our industries here. But the same folks who antagonize business harm us on the QOL front, too.
I think a lot of the destructive stuff happening is long-term destructive, but not so bad short-term. Cutting/disrupting research funding doesn't hurt us this year, but it probably makes us poorer twenty years from now. Convincing the most ambitious and smart foreigners not to come to the US for school and stay to start a business doesn't show up on this year's GDP numbers, but again, twenty years from now it probably makes us poorer. Dicking around with the reliability of economic statistics and the independence of the Fed will cause us a lot of problems in the next decade or two, but probably not this month. And so on.
So . . . let's get this straight. The U.S. equity markets went up 23% in 2024 and 24% in 2023 but investors and business people think Biden was as bad as Salvador Allende and Kamala Harris might as well have been La Pasionaria! And the same businesspeople who once professed to believe in Eugene Fama and hard-form efficient markets theory are now such vibey snowflakes that "they believe left-of-center parties are full of socialists who don't like businesspeople, and they fear any sign that those people are calling the shots". Isn't this just an elliptical way of saying, "businesspeople are dumb and markets are dumb"?! Or at least that they believe dumb, or certainly heavily caricatured, things? Good grief, I count myself a liberal and I certainly don't believe either of those things! If in fact businesspeople and investors can't see through the persiflage of rhetoric to at least try to get through to what is really going on in the world and how it affects the discounted view of the aggregation of future prospects of listed enterprises that comprises the "market", then that is actually a really interesting and potentially more disturbing story than "MAGA likes Trump" and "Libs are all pinko commies". Maybe it's just that the U.S. is, still, functionally the only meaningful potential source of long-term return for global investment, and Adam Smith's observation about there being a lot of ruin in a nation is still calculated to have a long way to run in the U.S. Or . . . maybe not, and Mr Yglesias is right and I'm just hopelessly naive! Which frankly would scare me beyond words about the prospect of the return of rationality to the United States!
It's not that they are better, it's that in theory there is less substantive risk. If you elect a Democrat, there is a higher chance that they are going to be lobbied by the far left to enact destructive fiscal policies for growth. The right is friendly to business (even if everything else burns).
I suppose that's true over the long term, but Trump has been talking about tariffs since the 1980s and made a big deal of them in 2024. The business community collectively decided to pretend he wouldn't do them.
Great point. There were literally Mass Deportation signs at the convention!
One thing I've noticed in the real estate investing community is that... most real estate investors are not very smart. I've seen some unironically calling for Powell to be fired as if that would lower interest rates instead of the opposite. Others want to end the Fed altogether and don't grasp how that would collapse asset values.
Wasn't true during Reagan, either. Volcker broke stagflation and was a Carter appointee. But at least AIUI Reagan didn't try to mess with the independence of the Fed.
Definitely better for the tax rates they have to pay. And for keeping those obnoxious OSHA folks out of their workplaces. So on net for businessmen: yay Republicans!
Hello from Taiwan! Just wanted to flag that I’m back from my brief hiatus and will be hanging out with you all in the comment section again.
Eat some stinky tofu.
I'm a pretty adventurous eater, but stinky tofu might just be a bridge too far for me.
If you like aged cheese, there's a good chance you'll like it. There is a big gulf between the smell and the taste.
It’s just pickled tofu that is deep fried.
Is that really it. The smell really kills certain parts of the night markets for me.
Are you in Taipei? What has been your favorite night market?
I'm partial to Tonghua
Do you like kimchi?
There are different levels of stinkiness to the tofu, if you get it at a restaurant that doesn’t specialize it will be generally milder.
A friend of mine describes it as "feces on a plate"
Welcome back, Ben! How’s it going so far?
It's hot, rainy, but mostly wonderful. Living in an Asian city with great mass transit and great food just checks a lot of my boxes.
Please post regular updates!
I've only been to Taiwan once, years ago, but the national parks there are staggeringly beautiful and of course the National Palace Museum is amazing.
The comments section is like: https://www.youtube.com/watch?v=qfNReBBUk_w
" The Obama administration used “Dear Colleague” letters from the Education Department to try to induce colleges and universities to make various policy changes. "
There is no moral equivalence between those letters and what the Trump regime is doing to universities. Those letters were not followed by the withholding of grants for research, the destruction of NIH, NSF, USAID, and other sources of funding for research. The Obama administration did not trash due process in order to extort pots of money from universities for paying reparations to students allegedly harmed by discrimination. The Obama administration did not set out to reduce the enrollment of foreign students as a way to choke off tuition revenue to universities.
Furthermore, the Obama administration did not make a pretext of pretending to care about Jewish students while running an administration filled from top to bottom by vicious anti-semites -- real ones, i.e. people who hate Jews because they are Jews, not people who criticize Netanyahu.
The reason that the Obama-era "Dear Colleague" letters "did not generate widespread resistance and litigation from university administrators or widespread outcry from college faculty," is because they were not part of a concerted effort to feed universities into the wood-chipper in violation of contracts, laws, and due process.
If you want to use the "Dear Colleague" letters in order to illustrate your point that "The Parties are not Symmetrical," then start with the most significant asymmetry: only one party is trying to destroy American higher education and scientific research, and using thuggish and illegal means to do it.
I think that's pretty close to Matt's point: Democratic conflicts with universities are disagreements between friends, so to speak. There's no real risk of those escalating. Same with Republicans and businesses.
I'm not even sure they were disagreements so much as license. Universities want very badly to racially discriminate in admissions. They also seemed to have a well of people excited about the possibility of presuming men guilty in any remotely bad or messy interaction between the sexes.
That stuff may not have threatened core research functions the way what Trump is doing does but I think it laid the groundwork for the 'two can play at this game' backlash universities are facing. I don't want to engage in a false equivalence but it sucks and we're all going to lose over the long term because of it.
The theory of the Trump administration is that by hurting the scientists, who Trump can directly affect, the scientists will in turn hurt Trump's true targets: university bureaucrats and humanities faculty (who Trump can not directly affect because there is no federal money spigot for them). I don't think this will work, mainly because science faculty are limited in their ability to hurt humanities faculty, and now we are all worse off.
Yea I put the risk of Trump net improving the way these places operate at roughly 0 and the lasting damage on several fronts to be pretty high and hard to recover from in the near term.
This is one of those “stoned dorm room” takes (note: I am neither in a dorm room nor stoned), but the only real solution is that everyone has to care a lot less about higher education in the sense that we agree that it is a, but not the, ladder of social and economic advancement.
Academic study is, and should be, “elitist” in the sense of uniformly demanding a high base level of intellectual ability and discipline - but it needs to also be just one of many pathways to high status. Most people are not academically inclined; that’s totally fine, as long as there are other tracks.
Europe outside of the UK does somewhat better at this in the sense that university is either elite at the front end (hard to get it) or the back end (huge attrition, so only those who are capable persist), while providing a somewhat better spread of vocational options (some countries are better at this than others, of course). As a result, higher ed tends to be somewhat less riven by wokeness and the backlash to it.
The UK opted for mass higher education under Blair as a means of artificially depressing youth unemployment figures, and so is largely in the same mess as the U.S. - although the overall wokeness / backlash situation is still more chill.
Fully agree, but to your point, as long as higher ed is so wound up in our (post war) cultural mythos around equality and meritocracy it will be really hard to disentangle it from partisan politics.
Sometimes I think I have a bit of a unique perspective on places like SB because I'm from a poorer-than-average majority-white place who graduated with a high school class where a majority didn't go to a four year school and a significant percentage went straight to the workforce, and I spend a lot of time socially with people who didn't attend college.
Like, "I went to college and hang out socially with people who didn't" doesn't seem like it should be a rare thing to me, but it's sometimes treated like it is. (See the recent New York Times op-eds expressing genuine shock that there are still people who smoke cigarettes.) I'm not SPECIAL - I would say that this kind of heterodox social circle is more common among the population as a whole than the degrees-only-bubble but a gigantic percentage of the writing and political analysis we get comes from the latter group.
I guess, thinking about it, if I had stayed where I went to school, in those circles, instead of moving back to my modest home metro, then I would have probably ended up in a purely educated bubble myself over the last 20 years.
So, anyway, having all this experience, I don't think people have trouble feeling comfortable about their status without a college degree AT ALL. There is no inherent defensiveness or inferiority complex on the part of the non-college people. Not "only a little bit of one" - NONE. If it comes up, there can be some tension, but as a rule it doesn't come up. I don't think those people lie awake at night thinking about all the opportunities that are being denied to them because they aren't in the professional class.
At the end of the day, "status" is an issue, the "ladder," as you say, but mostly people just want more money - you don't get status with credentials, you get it by having money, friends and a family. People without degrees are mostly more socially depressed because they have less of it, not because their jobs or vocabulary make them feel inferior. Status is not directly linked with economic wellbeing - and, for that matter, mental wellbeing is not directly linked to status - but the correlations are extremely close for most Americans.
>>The UK opted for mass higher education... and so is largely in the same mess as the U.S. <<
We're a third richer than Britain or the EU and our enterprises make theirs look like lemonade stands.
Our universities are definitely not a mess! (well, at least pre-Trump). But give it three years.
> the risk of Trump net improving the way these places operate at roughly 0
I don't think that's true. I'm already seeing changes, particularly the removal of DEI at every level.
If it sticks I will give him that.
Yes, he will remove DEI the way we paved the way for excellent urban renewal in German and Japanese cities following WWII.
Also, excellent work removing DEI from the military. Crackerjack job there, folks.
The claim was about *net* improvement. It seems obvious to me that there being somewhat less DEI and annoying protests can be more than outweighed by research funding cuts, particularly if a brain drain results.
Also, the universities take a cut of the science grant money for overhead, which includes administration salaries, so turning off the spigot could result in uni admins losing their jobs.
Even if you want those people to lose their jobs is it worth pumping the brakes on scientific research? All but the most MAGA pilled people would say no
I mean I don’t know how much love is lost with bloated college administrations (while tenure-track positions dry up in favor of adjunct roles for professors)
But to your question, of course not
This may be right, but is unfortunately crazy. It seems Trump doesn’t know any scientists. Most of them don’t care what the humanities departments do as long as it doesn’t affect their grad students or labs.
“We’re going to hurt innocent party X to make them hurt Y” is pretty evil. If I were X, I would stand with Y and do whatever I can to hurt the people who are hurting me instead out of principle.
It is also pretty standard politics.
The question is which principle. I think the Democrats need to relearn the value of spite - when they kick you, kick them harder, so maybe they’ll think twice next time.
"I don't think this will work, mainly because science faculty are limited in their ability to hurt humanities faculty, and now we are all worse off."
UChicago recently halted all graduate admissions to their humanities and social sciences programs (which includes economics). I don't have insider info, but the word on the street is that this is precisely the financial ricochet of halted science grants.
I'm not denying that's what you've heard, but I'm not sure it fits. Assuming this list* is mostly comprehensive, you can see that only 15 NIH grants and 9 NSF grants at U. Chicago have been impacted to the tune of ~$15m at most (I think this is overstated - some of them are diversity supplements yet the whole grant amount is listed). The university's cut of that (probably inflated amount) would be about $5m, the hit for which would be spread over multiple years, and that's assuming the PIs just don't turn around and apply for new grants anyway.
I have seen institutions exercise a lot of *caution* because of potential future funding cuts, which might be the reason. I could see them scaling back admissions to more costly programs to have a bigger cushion if the worst does come to pass.
*https://grant-witness.us/
Universities often operate with precarious finances. At UChicago, poor accounting practices and overleveraged debt have created long-lasting repercussions. In an effort to correct course, the university has gone through multiple rounds of layoffs and early retirement offers. While the loss of a relatively small amount of federal grant money may not seem consequential on its own, it compounds a host of other financial pressures and with very bad timing. That said, you’re also likely correct that some of these pauses or cancellations of humanities class intakes are pre-emptive measures.
History never repeats itself perfectly, but this hints at an interesting implication. If a Republican administration seems to be jawboning some favored organization, we should consider that they may be taking sides in an internal conflict.
If all that comes out of this are agreements like the Brown University agreement we will be fairly lucky. Though the precedent is still bad.
Sorry, Deadpan, but my point was not about affinity, friendliness, or trust, it was about actions, concrete and illegal actions.
To find an actual morally equivalent case, you have to go back to that time when Elon decided to violate US foreign policy by putting Starlink at Putin’s disposal, so the Biden administration cancelled all federal contracts with Starlink and SpaceX, nationalized all of Elon’s holdings, and left him penniless, only this never happened.
Sure, and this is much closer to the substance of Matt's article. Both parties have reckless, revolutionary factions, but only the Republicans have been captured by theirs.
But Matt's article is not attempting to balance moral scales, he's trying to illuminate a phenomenon that seems to puzzle a lot of observers, including a lot of people in these comments, given the "who's the socialist now?" entries we've been seeing lately.
Agreed. A lot to like in Matt's post _as a warning to progressives to empathize with their opponents_. Also, a whole lot of unreported causal reasoning.
When did Elon decide to violate US foreign policy by putting Starlink at Putin's disposal?
To Biden’s everlasting shame and discredit
"...o Biden’s everlasting shame an...."
What is to his shame?
It's the perennial threading problem -- on Substack there's no easy way to tell what you are responding to, or what the subject of your sentence is.
I should do better at including in our comments what we're replying to, good point
that Biden didn't cancel all federal contracts with Starlink and SpaceX, nationalize all of Elon’s holdings, and leave him penniless
"... Biden didn't cancel all federal contracts...."
Thanks!
"...disagreements between friends, so to speak. There's no real risk of those escalating. Same with Republicans and businesses."
Outside of the 1.5 trillion US green energy sector and the four trillion US import sector, sure, it's warm friendship 24/7 for US business. There's also the Republican Party's (Trump heads that party after all) highly valuable, free "advice" on branding and marketing. Why, I don't know how Coca-Cola and Cracker Barrel would have survived had Harris defeated Trump!
EDIT: The carbon capture industry is yet another sector benefiting from Trump's warm embrace!
https://wapo.st/3URW7PH
Yeah, that stuff is bad and probably makes businesses more nervous than they would be with a normal politician.
I don't really understand what kind of point you're making. Are you just venting?
The point I'm making is that the claim that the MAGAfied GOP of 2025 is a "business friendly" outfit seems decidedly questionable.
Obama and Biden supported illegal discrimination against Asians in college admissions. No discussion of college policy can skip this.
Which of the Dear Colleague letters said that or had that effect?
I don't think it's particularly controversial to assert that mainstream Democrats were still supposed to favor affirmative action and gnashed their teeth over the conservative led Asian student Supreme Court case.
It seems quite reasonable to be both in favor of affirmative action and opposed to discrimination against Asian students.
Those two things are largely mutually exclusive.
Proponents of affirmative action won't own it. It is a deliberate policy of helping one group of people based on color and/or sex and not helping another group of people based on color and/or sex.
And in a world of scarce resources (admission slots, jobs), that means choosing based on color and/or sex. Which is how most people define "discrimination".
People often hold incompatible beliefs, especially when it comes to politics. The idea that people who support the idea of affirmative action simultaneously endorse the types of anti-Asian discrimination carried out by Harvard is kind of silly. Especially when we are talking about normal political partisan.
Oliver pretends that the Obama and Biden administrations explicitly were endorsing and promoting Harvard’s actions, because they didn’t adopt the Republican position on affirmative action. It’s silly.
Are you saying simply that affirmative action is necessarily discrimination against everyone not benefited? Or are you making some more interesting claim about admissions and Asian applicants in particular?
Yes, but this is never how it works out in practice, because you also have to bring in legacies and athletes.
The fact they didn't say immediately stop doing this unpopular, immoral and illegal thing.
Now that is a dishonest take. “The absence of evidence is evidence behind my unsubstantiated accusation.”
What do you mean, what is unsubstantiated?
You made a bold claim and present it as inherently true. When you are pressed to show how it is true you assert the absence of evidence confirms your statement.
It’s very simple and is surprising that you don’t see it. It’s the same rhetorical dishonesty Omnicausers use to claim random people are complicit in “genocide” and “Zionism.”
I think the point was about innate trust within those institutions big business for Republicans and Elite Education for Democrats.
The counter example to Trump and higher education is something more like Lina Kahn and anti-trust overreaching.
Is your claim that the end goal of the Trump administration is the *destruction* of higher education? Because I do not believe you are right here. I think Trump et al may wreck a lot of that stuff via hamfistedness, but that the goal is universities that aren't overtly anti-Republican or anti-conservative organizations.
And indeed, to the extent we're talking about taxpayer funded public institutions (not Harvard, but state universities), it's pretty hard to justify having them be out there taking explicit political positions as an institution or effectively funding activism for one side in a bunch of US political disputes. It seems like an inevitable part of being dependent on federal funding is that you ought not to be heavily involved in everyday political disputes. It seems like a lot of disciplines have become pretty overtly activist and poltiical in their approach, and it's not hard to see why Republicans aren't interested in funding academic disciplines whose stated goals are basically "everything you guys hate, we love."
Things did get stupid in academia really quickly during the 2010s. The push for “impact and social relevance” combined with social media made everything worse.
University administrations have never been "anti-Republican." The faculty leans heavily liberal, and that's certainly not getting better under Trump. If you thought it was hard being openly conservative at a University, try doing it in an environment where a conservative administration is arbitrarily threatening every single scientist's jobs and research funding. Even the relatively few conservatives I know have become militantly anti-this-administration.
I might go even a bit further. Public universities should have a pro American viewpoint. The purpose of Public schools and public universities should be to educate kids into being full patriotic citizens.
I'm totally ok with public universities firing anti-Western/anti US professors and staff. They shouldn't be employed.
Just like we wouldn't want a white supremacist professor.
I mean this is how we got Enrico Fermi from the Italians, is that they cared about expelling academics based on their beliefs whereas we didn't. I think we were right and the Italians were wrong.
I think it depends if it impacts their research. Like if a chemistry professor also thinks that I, a Jew, should have died at Auschwitz, but is doing cutting-edge work to fuel our economy, I think the university should keep him on payroll. Perhaps he shouldn't teach, though.
he definitely shouldn't be teaching
And more to the point, the Democratic administrations did not ever try to extort or take over institutions they saw as opposing them. No seizure of oil firms. No disbanding of the Chamber of Commerce or the Business Roundtable.
I know it wasn't Matt's point that the Democrats' and Republicans' actions toward *universities* were in any way symmetrical, but there is *no* Democratic action in any sphere similar to what Trump and the Republicans are doing.
Matt is scheduled to write a long mea culpa admitting this in February 2027, let's keep to the schedule ok?
Obama was 100% holding a cessation in funding over the universities here, the difference is in degree rather than in kind: Obama as an institutionalist would have taken a longer and more careful road to cancel funding, and universities kind of wanted to make those changes anyway (they had activist faculty pushing for it already). That said I am 100% opposed to the Trump administrations moves, but I think the correct response is basically to dial back a lot of the Title xxx machinery that he is using (the Department of Education should only be addressing really serious cases of discrimination and not running around inventing new legal systems or policing microaggressions).
Department of Education? Not familiar with that.
This is correct, and since the counterfactual is useful here: if the Trump administration had kept itself to using Obama-administration methods to push more right-coded goals, lots of people would be *unhappy* but it would not have been viewed remotely the same way. (nor would academia have been as sanguine about Obama if he’d used Trump’s approach to achieving his goals)
As I have said before, the left-wing thought police came wagging fingers, and the right-wing thought police come swinging truncheons.
But I'd argue that this is (1) recent and (2) significantly downstream of the fact that the left-wing thought police have a lot of internal support at universities.
The left-wing thought police got the army involved in forcing desegregation. They eliminated non-profit status for universities that didn't cooperate with their priorities. They expelled the Yale students who protested the Women's Center. They rescinded admission from Harvard admittees who shared the wrong memes.
To get university administration to push right-coded goals they don't support as hard as they have pushed left-coded goals they did support, it is going to take a lot of pressure.
I think it was Eisenhower who got the army involved in forcing desegregation, based on what he saw as his duty to enforce a Supreme Court ruling (a ruling he disagreed with, if I remember correctly).
The entire post reads like someone instructed ChatGPT to make moral equivalence argument between seventy years of Soviet rule and that one time in 2017 the students at Oberlin demanded wage equality in the cafeteria. I gather what Matt is aiming for is a kind of literary "soft-focus" filter that helps us politically-engaged folks understand how things look to 'normal' American voters. But as a literary device, it just leaves me with the feeling that the narrator is unreliable.
"... one time in 2017 the students at Oberlin...."
Ah, an LGM reader, I presume!
Yes, it is of the same genre, though less egregious, than "RFKJr. is firing anyone who understands science, banning vaccines, and destroying the CDC, but Michelle Obama suggested that people could eat vegetables and exercise, so both sides are equally bad!"
I am not disagreeing with your point. One thing I will add is that I read quite a lot of the Dispatch, which is traditionally Regan conservative I would say. They deal mostly in good faith, and all the writers, and comment section, HATE the Dear Colleage Letter.
You exaggerate Obama's administration. Israel, the political entity didn't like the stance against the in-your-face allowance of settlements.
This whole piece reminds me of the Tyler Cowen quote:
“People in the EU are super wise. You have a meal with some sort of French person who works in Brussels—it’s very impressive. They’re cultured, they have wonderful taste, they understand all these different countries, they know something about Chinese porcelain. And if you lived in a world ruled by them, the growth rate would be negative 1%.”
It is important to remember they aren't actually that wise, if you ask them about GMOs it is quite likely they will spout weird pseudoscience.
And that you take aspirin for a cold, ice water and conditioned air will make you sick…
Now that I think about it, the home of Louis Pasteur has turned into a land of superstition when it comes to rhinovirus
This doesn't align with my experience. The GMO crazy people are more normie Europeans than the upper class posh type with a classical education Tyler Cowen was talking about.
and no A/C, lol.
Learned from a Noah Smith that the death rate from heat in Europe is almost twice the death rate from guns in America.
https://www.noahpinion.blog/p/europes-crusade-against-air-conditioning
Europeans really like being poor, hot, and smug.
I work for a company based in Amsterdam. My Indian colleagues who immigrated to the Netherlands can't comprehend how the Dutch don't have AC.
Classic American to run together all EU countries and ignore differences.
Yeah! As my former Finnish boss used to like to say in his characteristically pompous style, “as everyone knows, all Germans are perverts [because they go to the sauna nude in mixed-gender groups].”
Do the Germans think the French are perverts, or vice versa? I could see it going either way there. Kind of hilarious that such different people are right next to each other on the map. How did they all manage to live together under Charlemagne.
Back in my Middle East studies days, I learned about the "Triangle of Insults": the worst thing a Persian can call another Persian is an Arab; the worst thing an Arab can call another Arab is a Turk; the worst thing a Turk can call another Turk is a Persian.
For the Persian-Turkish part, is this historically downstream of Ottoman-Safavid rivalry?
Probably! Every country has its own raft of stereotypes directed at others, to say nothing of intranational stereotypes.
And yeah, most of the national distinctions in modern Europe are pretty artificial, or at least pretty recent.
Classic EU to run together all EU countries and ignore differences.
Brutal.
I don't follow what this has to do with today's post. It was about business people.
Social media is helping to align cultures and politics. There's a push by the European right to Americanize industrial policies plus the culture wars. Maga is very close to Oban in many ways.
French dirigiste traditions do tend to lead to slower growth, but these traditions are very different from other parts of the EU. The EU does not equal northern France.
and it would be a better world
This analysis was really good, especially the focus on the smallish slice of the tech sector that's driving most of the gains in the market and how insulated that sector is from Trump's policies.
I've read (maybe from noahopinion) that something similar is going on in terms of broader economic investment/growth numbers. It seems that the current AI investment boom is more than offsetting lots of weakness in the rest of the economy and propping up big picture numbers.
For me the key is that there's no rule that market prices have to be "correct" at any time. They just reflect the results of a voting mechanism. They can overprice or underprice risk and be wildly wrong at any time. This is similar to how voters can't judge which candidates will be good for their long-term interests and can massively screw up and elect a president that does material harm to their own welfare.
IMO, that's the scenario we're living through. Personally, I'm convinced Trump's policies and actions will result in US GDP being significantly smaller in 10 years than it would have been had he not been elected. This means stock valuations in 10 years are likely to be a lot lower than they otherwise would have been. That doesn't mean a crash is definitely coming, only that we'll be poorer, less powerful, and maybe less safe in the world than we would have been had the election gone the other way.
There may not be a crash but there could be a lost decade nevertheless. It can just unfold in a less dramatic fashion as gains peter out with an extended period of stagflation.
Trump is hurting the US GDP growth, the IMF projects the US will have by far the biggest slowdown from 2024 to 2025 compared to other developed economies, China, and India: https://www.imf.org/en/Publications/WEO/Issues/2025/07/29/world-economic-outlook-update-july-2025#Projections
The big surprise is that the rest of the world didn’t descend into an every-country-for-itself trade war and thus held up relatively well; EU growth is projected to even increase slightly. Foreign stocks (VTIAX) are up over 20%, double the S&P 500.
Yeah. It's interesting to watch this play out. If Trump was more skilled in managing our international relations, we might have seen something closer to the every-man-for-himself scenario play out instead of the "everyone secretly and not so secretly hoping and planning for the US to get what it deserves" scenario we're actually seeing.
IMO, the magnitude of the US animus and distrust Trump created is huge and will have serious costs to the US that are totally separate from the cost of the tariffs alone. Trump has added a very expensive "reckless, unreliable, and untrustworthy trade partner" tax to every deal an American company makes with a foreign one.
One of my worries is that in 20 years, nerds will be pointing to papers showing that the American economy grew by X% less than it should have each year over a decade because of Trump, but without a stark crash, only nerds will notice.
This is virtually certain. You can already see the gap in projections.
And yet getting on for a year, the market disagrees with you: it sees profits in ten years being higher. Yes, the market can misestimate the future and it will self-correct eventually, but nearly a year of such (imo) misestimation seems to be rather extended.
Fair, but imo a year is nothing. As they say, markets can stay irrational a lot longer than most can stay solvent betting against them.
I'll give everyone here insider information when I buy my first Bitcoin so you all will know when it is immediately going to crash in price.
There's probably a 90% probability of a debt crisis within 10 years,
99% within 20
But neither party is interested is avoiding it.
Because voters aren't interested
I think you mean "neither party is interested in ADDRESSING it."
Sorry you are correct
We're going to be less safe regardless of who is the President because you cannot keep blowing up the debt and expect to increase defense spending but I agree with the rest.
Is the primary driver immigration for GDP slowing? The tariff effects appear modest and reversible. Most r&d is occurring at private companies, not universities.
The tech sector has very little regulation compared to other industries. Seems like there's a lesson there.
Edit: to be clear, I think there should be more regulation of tech, but perhaps also other industries should have less.
"Anti-Trumpers often seem to be unaware of what this project even is, but the basic idea is that institutions dominated by the educated professional class in America have become so fatally compromised by 'woke' left-wing ideology that only a cleansing fire can save our civilization. This is clearly not what most people believe or Trump would have won in 2020, Republicans would be leading in the midterms, and his approval rating would be above 50 percent. But it’s a large minority viewpoint that says all this institutional destruction is good for the long-term growth potential of the economy. When Elon Musk talks about the 'woke mind virus,' this is what he’s saying: that the integrity of Bureau of Labor Statistics data is a small matter beside the stakes of rebuilding educational and cultural institutions from the ground up in order to celebrate individualism and meritocracy."
I would clarify that the Musk statement at the end of this passage is only a subset of the sentiment described in the first sentence. Musk might be specifically concerned about the effect the "woke mind virus" has on economic potential, individualism, and meritocracy, but most Trump supporters just want to maintain the cultural supremacy of their tribe (though they may define their tribe differently from one another) and/or stop societal change. As J.D. Vance himself has said rather explicitly, if that requires economic sacrifice rather than fostering economic growth, then that's worth the price. And tribalism certainly has very little to do with individualism or meritocracy.
Yeah - many of them seem pretty opposed to meritocracy and individualism as such.
It was the basis of the big blowup circa January when Musk was fighting with all the anti-Indian people on Twitter. While those folks were ultra-online weirdos, the feelings of the general pro-Trump rank-and-file are more in line with them than it is with Musk. Not to say that all Trump fans are primarily motivated by turbo-racism per se - in fact I'd say a plurality of them are driven mostly by a dislike for contemporary women. For others it's about sexuality, or the Cracker Barrel logo, or wanting the ban the designated hitter (that last one is me, by the way). Point is just that Musk is sort of a weirdo even within MAGA when it comes to his specific concerns.
I'll go ahead and say that the anti-Indian stuff is just a too online thing. Not to say that a lot of Trump supporters aren't generally bigoted, they just haven't given much thought to Indian people one way or another.
It’s a weird tech bro thing too.
IMO the reason it's too online and mostly anonymous is because the ones who are actually in tech and not some random MAGA racists who didn't even go to college, have to face their colleagues at work if they use their real names and there are real consequences for that kind of open racism.
I have a different theory: a whole bunch of the accounts shitting on Indian people aren't coming from the US.
But yeah, ordinary MAGA types living in Arkansas or wherever aren't encountering Indian people on a daily basis at all. Wouldn't even know which slur to use.
That may be a factor as well.
I was always okay with the weirdos in the AL having the DH, but WHY did they have to force it on the NL too?
https://x.com/Whateve03887524/status/1857186270331760677?t=ycLMbXJlL2EKCVzDA1TUug&s=19
Right one advantage of "woke" as a target is that it covers over the divisions between people who think pollution regulations are bad, people who want favors for their own companies, people who want to return to the cultural dominance of their kind, and people who dislike the current culture of educated Americans.
Was going to make this point. I don’t think the MAGA minority is really linking institutional destruction and the long-term growth potential of the economy.
They just want the institutional destruction and to own the libs and to reverse cultural trends. Whatever happens afterward with the economy, happens.
In other words, if the economy is worse off but they see fewer brown people around, they’ll take that trade.
No doubt some of this is true, but most Trump supporters, heck most people in general and many Democrat's mistakenly do not see deficits and tariffs and anti-immigration, and defunding university research as harmful to themselves.
For sure, but my point is that even if they do see the harms they don’t care.
I mean, these are people who think the ideal time in American history was when families lived in small houses on one income with one car and almost never ate at a restaurant. They literally prefer a less dynamic society.
Actually, no they don't. They just think they do. They would make a beeline for the DeLorean to take them back to 2025 a day after being plopped down in 1955.
Very Brexity. Except that in Great Britain they got Brexit, being poorer *and* having more brown immigrants (and fewer Poles).
I think a significant portion of voters are unable to connect there might be a relationship between economic strength and institutions/rule of law.
I feel like a lot of people are missing the important truth that President Vance would be much worse than President Trump. JD is a genuinely villainous ideological authoritarian in ways Trump doesn't even approach.
Yes but he’s not as popular and I doubt he will ever be.
Sure, but the danger is that Trump's desire for personal power and enrichment is providing cover for Miller/Vance to build a private army/security apparatus that can be wielded after Trump is out of the picture.
Yes, this was a charitable explanation by Matt. There's still a gloss of pro-individualism and pro-meritocracy, and no doubt some segment of the Republican coalition sincerely believes it. But it's already clear that's not where the energy is in the party.
The project with the energy and momentum is "all the stuff Democrats did, but for the opposite groups." Identity politics, hiring discrimination, litmus tests for favoring certain races, genders, religions, lifestyles, political orientations, all of it. Just with the sign flipped on which groups are good and which bad.
And yes, this is extremely stupid and disappointing from a liberal centrist perspective. Horseshoe theory, reversed stupidity is not intelligence, etc. One wishes the backlash to woke would happen on a... more principled? Less idiotically literal? Level. But it didn't and isn't.
I mean, one problem is that if I sell my equities I will be holding American dollars. And I *really* do not trust Trump with the dollar, or with US treasuries. So I end up with a "least bad" option of holding shares of US companies and just praying for the best.
Oh, also all this deficit spending is STILL pushing extra money into the system that has to go somewhere. And it trickles up to the wealthy, who park it in stocks and bonds, so asset prices continue to rise.
You can exchange those dollars for other things: farmland, gold, bitcoin, Canadian Dollars, Euros, timberland, German Bonds, Mexican Bonds...
Eh. Those foreign accounts are a pain to maintain as a normal individual. Literally buying farmland or timber is also a pain, so I play those through ETFs. Same for crypto actually - and I am very wary of having too much crypto exposure.
Foreign bond funds - maybe I should look more at those? But when I try saying "I'm worried about the US so I moved $ from the S&P to Mexican bonds, to play it safe", it just doesn't sound right.
You can hold foreign stocks through index funds like VTIAX which is up double the S&P 500 YTD.
This is the way...
While information about convenient ETFs to invest in otherwise-opaque or logistically inconvenient sectors or vehicles is always welcome, looking at the 5 year on VTIAX suggests that its value as a play is questionable.
It reminds me of when Lehman's assets were being sold and some random 20-something banker had to travel to a uranium mine they were now liquidating.
Many of those things are extremely strongly correlated with the US stock market.
That wasn't what the OP referenced, though. He doesn't want to hold USD or US Treasuries, with the implied reason being tied to devaluation (the USD) or inflation (Treasuries). There are other options, some of which I listed.
Many of the things I listed are not highly correlated to the US stock market.
But only the US dollar is backed by F22s, nuclear submarines and the 82nd Airborne Division
Yeah Argentinian equities sucked but they were an effective hedge against the peso!
I'd love some practical investment advice. I have trouble keeping track of all the moving pieces in my head.
*NOT A FINANCIAL ADVISOR*
For Most People in Most situations most of the time, following two rules will leave you in a better shape than the vast preponderance of ppl.
1) Invest in broadly diversified, low or nominal fee index funds/ETFs. Do not pick which individual stocks will be there winners, only pick that there will be a winner. These indexs track relevant market indicators Classic examples are S&P 500 indexes, Total Stock Market Indexes, and International indexes. VOO, SPY, VTI and the like.
2) As a general rule of thumb, equity to bond ratio should be the sum of 100 less your age in equities.
Equities have a higher return over time than bonds, but at higher risk. If you are younger, you have longer for returns to compound and get the upside from any downturn. If you are closer to retirement not losing your pile is just as important as growth.
So if you are 40, then 60/40 stocks (as index funds) to Bonds is a stable and safe ratio. Depending on your age income and risk tolerance you can stand to carry much more than this in equities. But if you are say 60 and nearing retirement, the possibility of an AI bubble scares you more than the additional gains lost.
Bonus #3) Take advantage of a High Yield Savings Account. Rates are likely to come down but you can still get north of 3.5 even north of 4% with some promos at many places. verses basically nonexistent APY % with brick and mortar GSIB banks. Many apps make it super easy to utilize your HYSA functionally as a debit account. I keep 100X in my savings account and then move to my debit account on the same platform only as needed to yield maximum monthly interest payment.
Isn't 30% in bonds for a 30 year old excessive? I'd think it should be 100-0 until, say, 10-15 years out from retirement. (Note that I am also not a financial advisor.)
Good point, Most likely yes. I used my own age for the math but not what I do, will edit for clarity
Most people I work with and most people I know with accounting and finance phds argue that the risk premium is such that you should flip your portfolio to 65% bonds the day you retire and should be 100% equities every day before.
Not financial advice. But the portfolio really holds up for the 20th and now the 21st century
MaxMyInterest.com gets you easily into an HYSA and transfers between your main bank account and the HYSA automatically monthly
Plastics.
It's a shame there don't seem to be Hungarian, Russian or Turkish members of SB who can give insight into what it's like living through an authoritarian breakthrough. Opinion polls indicate quite a few Israelis are regretting their prior "sure he's corrupt, but at least he fights" votes for Netanyahu.
Seems like there is a ready audience for No Kings protests in Israel.
Israel's had protests, strikes, sit-ins, conscientious objectors, open letters...it'd be wrong to say it's achieved literally nothing but still, to me it shows there's no substitute for winning elections.
Completely agree. I think this is true in Israel and the United States. Since there aren't elections in the West Bank and Gaza, it's much more Kremlinology and internal politicking, but the same principle applies. One gets one political priorities enacted by gaining political power.
I dunno, man. The canon is pretty set, and without Kings, it's pretty hard to explain the Babylonian Exile.
Btw Bibi’s voters like to chant “Bibi King of Israel” at him…
https://mobile.mako.co.il/news-israel-elections/election_2022/Article-4201bfafc953481026.htm
Exactly. This is why I think it is so effective as a rallying cry. The track record of the Kings of Israel isn't great, historically.
Samuel tried that but it didn't gain traction with the electorate.
With a lot of Trump's gambits there are ways one could see them turning out ok or not bad if he doesn't follow through on the maximalist position. The universities, as Matt points out, are probably the prime example of lefty overreaching that has been bad for the institution. The Brown University deal doesn't seem like it's going to end higher education if that's the model.
That said, there are a lot of moves where the upside is limited and the downside is significant. It seems like the law of averages is all pointing down.
Other than needed federal revenue there's no real plausible upside to Trump's tariffs as currently designed. The RFK Jr stuff is a big health disaster, that may or may not spill over into the narrow economic sphere. The immigration crackdown as designed is bad and could get worse as it spills into legal immigration and international students.
Long term it seems bad for the stock market to disincentivize foreign students from coming to the US. But that’s obviously a problem that’s not being factored in right now
No one is going to be fired on Wall Street in 2025 for failing to accurately predict how big a STEM brain drain crunch will depress future growth 2030.
The thing that seemed to stand out to me was, that I would trust libs to design a public transportation network that was awesome but never be able to build it (protests, protect the turtles etc,) but when it comes to the economy the center left wants me to take the proggies seriously not literally? Definitely crap politics on the right... But I hate the pills the left wants me to feel morally obligated to swallow and virtue signal on, I definitely wouldn't trust them with an estate tax and a whole host of things... And even if they started "saying" the right things who could believe them at this point
Or you could just look at economic performance under democratic presidents and choose not to swallow pills.
Economic performance under a president is rarely the result of their policies alone. Outcomes are driven by long-term debt and business cycles set decades earlier, Federal Reserve policy where interest rates and actions like QE or QT drive growth and inflation, and global factors such as energy prices, supply chains, and pandemics. For example, Clinton benefited from Reagan-era deregulation and the dot-com boom, while Obama inherited the financial crisis but recovered largely due to TARP and Federal Reserve policies implemented during the Bush era. Correlation does not equal causation, and headline numbers under Democrats do not prove ideological superiority... Or that they are the better managers. And to say the " Democrats" is a bit reductionist as well... It's not like there is one economic vision on the left.
When trying to look at management superiority I think it's better to look at states that either have a red or blue trifecta.
It avoids national trends. There is clear that many of the superstar blue states CA, IL, NY have been fucking up.
Which is the whole point of the abundance movement to stop that fucking up.
After all, if you can't govern well in a state where you have full power, then why should voters give you power at the national level
Excellent point. That's why we Californians look with deep envy at the economic superpowers like Mississippi.
And yet Mississippi has been turning itself around while CA digs its hole deeper
https://theconversation.com/mississippis-education-miracle-a-model-for-global-literacy-reform-251895
https://www.statista.com/statistics/248063/per-capita-us-real-gross-domestic-product-gdp-by-state/
Education has been improving, but in terms of economics, has Mississippi been outproducing California's GDP growth?
There are a lot of correlating factors to untangle between blue states and red states
The ways that blue states have been "fucking up" are not really partisan at all. Red states exhibit the same anti-change NIMBY sentiments, they just haven't run out of room for new single-family subdivisions yet.
And yet it keeps being the case that the economy is better under Democratic than Republican leadership. An amazing string of coincidences.
Correlation is not causation
But it's not *not* causation. If it keeps happening and happening at some point you go "hmm." I suspect that by 2029 we'll be saying, "yup, another poor economic performance under a Republican President. Keeps happening for some mysterious reason."
I really hate this talking point because it leans into the concept of the president as the only important person in the country. Does it matter if Congress was Republican/Democrat at the time? If I told you that unified Republican congresses had better economic performance than Democratic congresses, would that sway you in some way?
The economy is driven primarily by where we are in the business and credit cycle, by Federal Reserve policy, and by global shocks. Party control at the White House or in Congress matters at the margins but not nearly as much as people assume, and using party labels as a scoreboard mistakes timing for management. Presidents inherit expansions or recessions in progress. Reagan inherited high inflation and a Volcker tightening. Clinton benefited from a peace dividend and an IT productivity surge. Obama inherited a banking panic already being stabilized by TARP and an extraordinary Federal Reserve. Trump inherited a long expansion and then faced a pandemic. Biden inherited a pandemic rebound with unprecedented fiscal and monetary stimulus already in place. You cannot cleanly assign outcomes without adjusting for the starting point. The Federal Reserve has been the dominant macroeconomic lever since the 1980s, using interest rates and balance sheet policies like quantitative easing and quantitative tightening to drive inflation, unemployment, and asset prices. Oil spikes, pandemics, wars, China’s integration into global trade, and demographic shifts often swamp the effect size of typical tax or spending adjustments. Major fiscal policies usually arrive late in the cycle or are diluted by divided government, which makes it easy to credit the wrong party when lagged effects finally show up.
Some studies do find higher headline growth under Democratic presidents, but those same studies show that the gap is largely explained by timing luck and external shocks. Early cycle rebounds tend to occur when Democrats happen to be in office, while late cycle slowdowns and oil shocks often align with Republican presidencies. Repetition does not create causation when the underlying driver is cyclical position. Better metrics than raw GDP or the stock market include real median wages, labor force participation, and cost of living adjustments. A high nominal income in a blue state does not automatically translate into higher real purchasing power if housing and service costs are extreme. Volatility also matters. A party could preside over higher average growth simply by having bigger booms and busts. Administrative capacity is another key measure, reflected in permitting speed, infrastructure costs per mile, and project delivery timelines, all of which often tell you more about competence than a national GDP print.
Comparing states with red or blue trifectas can be useful but only if we compare like with like. Blue megastates such as California, New York, and Illinois house superstar cities and sectors that drive GDP per worker, but they also struggle with extreme housing scarcity, very high infrastructure costs, and governance challenges that slow project delivery. These dynamics produce high nominal output but also chronic out-migration to cheaper regions. Red growth states such as Texas, Florida, Utah, Tennessee, and the Carolinas have lower costs, faster population and job growth, and generally friendlier permitting, but they also tend to spend less on safety nets and sometimes produce weaker outcomes on services that are difficult to compare across populations. Both patterns can be true at once. High output in a few blue hubs does not prove partisan management superiority, and fast job and population growth in red states does not prove partisan perfection. Cost structure, regulatory environment, and administrative capacity matter more than party branding.
There are clear examples of what works regardless of party. Expanding housing supply and reforming land use rules reduce rent seeking and improve affordability. Faster and simpler permitting with predictable timelines lowers costs and encourages investment. Targeted public investment delivered at world-standard costs can raise productivity. Tax policy should target genuine windfalls while minimizing avoidance and administrative burden, such as limiting step up in basis for very large unrealized gains while protecting operating businesses and family farms with clear liquidity rules. A steady macroeconomic policy that avoids overheating and sudden fiscal cliffs benefits everyone.
Patterns that appear to favor one party are not necessarily proof of management skill. If one party more often takes office near the end of expansions or just before oil shocks, it will end up “owning” slowdowns it did not cause. If the other party more often takes office at the bottom of cycles, it will “own” rebounds that were already in motion because of the Federal Reserve and broader market forces. The right question is not who happens to be in office when a quarterly GDP print lands. The right question is which party designs institutions and policies that keep costs under control, deliver projects effectively, and sustain real income growth across a full business cycle. If you want to judge competence, look at cost-adjusted incomes, volatility, delivery capacity, housing supply, and permitting speed. These are the levers that actually drive living standards, and they cut across party lines. There are a lot of other levers that are probably better examples of this as well.
But it does wiggle its eyebrows and silently mouth "look over there"
So do you think the Obama recovery was George W Bush’s work?
Obama’s recovery is oversold as a Democratic success story. The biggest drivers were TARP and bank rescues designed under Bush, massive Federal Reserve intervention through quantitative easing and zero interest rates, and global macro forces like collapsing energy prices and capital inflows. Obama’s stimulus helped in the short term, but the long-run rebound was powered mostly by policy and market dynamics outside the White House... I do think Obama's one of the best presidents we will ever have though for what that's worth.
I’m a little confused here. The estate tax exists now and only applies to estates of $14M for individuals. Is this something you are actually worried about for yourself?
People defending the estate tax is the worst case of “temporarily embarrassed millionaire-itis” ever. Who is going to be able to leave $14M to their kids (or more realistically grandkids) and thinks that’s a good idea that won’t mean you left a lot of happiness on the table in life and won’t just completely corrupt your kids? I am a millionaire and that seems absurd. “The man who dies rich dies disgraced.” -Andrew Carnegie.
The estate tax is the best form of tax, it hits completely unearned money overwhelmingly held by the super-rich, and we should rely on it as much as possible.
Carnegie’s quote is fine but that is not really how modern wealth transfer works. The current estate tax hits less than 0.1 percent of estates and raises only about half a percent of federal revenue. If the goal is reducing dynastic wealth there are better tools like ending step up in basis on huge unrealized gains rather than relying on a tax that mostly drives avoidance behavior and expensive planning strategies.
The step-up is very distorting. There are elderly people sitting on multimillion dollar homes way too big for them, but as part of estate planning it's better to wait until they die so it can be passed down to their kids without a giant capital gains tax.
I wasn't aware of "tools like ending step up in basis on huge unrealized gains"
Sounds like a good thing to move towards.
I will never have $14 million in real 2025 dollars unless I win the lottery, but I consider the estate tax to be genuinely evil. Income tax, capital gains, property tax, and sales tax all somewhat semi-plausibly map and scale to costs of government services provided in connection with what generates those tax revenues. There is, however, no reason for death to be a taxable event beyond what's needed to process a death certificate and a few other minor administrative matters as the vast majority of governmental costs associated with a death, e.g., police and emergency services, probate courts, etc., are already covered by other taxes or are paid for directly by the estate/heirs.
But it seems logical that estate taxes map to all those things, since accumulated wealth is just the accumulation of incomes, capital, properties, etc..?
Under that framework, it may be a "double tax", but it still plausibly maps to government services. And since, as Nikuraga says, it's "completely unearned money" from any heir's POV, I'm fine with that doubling.
Well, yes, that is indeed double taxation. The money may be "completely unearned money" from the heirs' POV, but the assets were already earned and taxed when it was the decedent's and it's the decedent who is deciding how to dispose of the estate, not the heirs. (If you want to get rid of the step-up basis for capital gains taxes for when heirs sell assets they inherited, I think that's reasonable since if we assume that the decedent was instead immortal, they would have had to pay taxes on the original basis when they eventually sold the asset.)
I'm curious why you think double taxation is immoral or evil then? If we already assume the right for the government to tax once, what is it that makes it wrong to do it a second time at this specific life event? Especially if we assume that the taxes do have to come from somewhere, so we're not looking for a "good" options, so much as we're searching for the "least evil" option.
" but the assets were already earned..." And protected by the systems so that some of it can pass down to heirs. The idea that someone who has all this wealth does not rely on the overall system working for them is absurd. The idea that taxes are too high is a rightist dream of having their cake and eating it too. When you die with a large estate while the budget wasn't balanced, you are passing on debt to your children and their kids. And everyone else.
Genuinely evil is interesting framing. Not "necessary evil" or "unavoidable evil", but "genuinely evil". I'm curious what else you find to be genuinely evil. Taxation on capital gains?
Lack of indexing for inflation is my biggest objection to capital gains tax (a position Al Franken shared at one time at least), but it's not in the same category of immorality as the estate tax.
The step-up basis loophole wipes out the capital gains tax for heirs.
As I noted in response to someone else, I would be fine with abolishing step-up basis because, if we imagined the decedent was immortal instead, they would eventually pay capital gains on the increased value, so there's not an issue from my perspective there.
Hard disagree. I work hard to kids a better life. If the state is going to take half of that when I die, then what's the point.
Note, I'm not where near the estate tax level.
But I consider death taxes to be hugely immoral and bad policy.
But taxing inheritances as income for heirs, with a generous deductible amount, makes sense. The tax on the estate itself is bad as is. It should just be income tax, or at the very least there should be no step-up in basis for transferred stock.
Of course, at this level a lot of these estates go into trusts that pay their own taxes, of which beneficiaries receive untaxed distributions. They probably should be taxed as inheritance income prior to going into the trust, but these trusts are usually created prior to death, so it can become a sticky wicket about which a CPA like you knows more than I.
Why should a poor man's child have to pay more in taxes on their income than a rich man's son just because the former labors for it while the latter inherits? Is labor less important to society than inheritance that we would penalize it more with greater taxes?
inheritance isn't income.
The income for the rich man was already taxed (probably multiple times)
"Inheritance isn't income" - you're making an definitional distinction. Its money gained.
The income for the poor man was already taxed as well! He earned it from a man who paid taxes on his income before buying something from the poor man who then paid taxes on his income.
But let me rephrase the question to suit you better -
A very simple example:
Abe is poor man who leaves his son Bill no inheritance. Bill works hard in his life and earns $3 million dollars of which he pays income taxes.
Charles is a rich man and leaves his son Dave 3 million dollars in inheritance. Dave lives on that $3 million dollars for his whole life and pays no taxes.
All other sales, property, etc. taxes are the same.
The government to function needs to raise 900k between them over their life. If they split those taxes then each would pay 450k and have 2.55 million left. If Dave doesn't pay any inheritance tax, then to raise the same revenue the tax that Bill pays is 900k leaving him with 2.1 million and he's paying 30% instead of 15%.
Why should we penalize Bill by making him pay more taxes so that Dave doesn't have to?
Most of the people hit hard by estate taxes aren't the working types, and their kids certainly aren't.
Taxing unearned money overwhelmingly held by the super rich is good, but the estate tax has a very poor form. Right now if you leave $100m to 1 person it receives the same tax as if the fortune were divided among 200 people, and to me that's crazy. It shouldn't be administered on the estate, but as income to heirs (perhaps with a standard deduction). If you divide your 100m fortune equally among 200 people, you should avoid estate taxation, because everyone only got $500k. We should encourage equal division of assets and Eliot Rosewater type behavior. Billionaires are bad but we should make more millionaires.
I'm okay with the estate tax but I strongly resist calls that it's perfect or great because I don't trust the politicians to leave it where it is and instead decide to start turning down the screws.
It’s embarrassing to even say something like “ugh it’s such a pain in the ass to figure out an inherited IRA” no matter how true it is, let alone “that fucking estate tax
Do you have 14 million or not is lazy framing And that kind of laziness is the stuff I'm pretty tired of on the left.
I don't understand why this is lazy framing. Either you are worried about the estate tax in some kind of generalized sense, or you are worried about it personally. I asked which one it is for you, specifically. What's lazy or framing about that?
Here’s why “are you worried about it personally or in general” is lazy framing no matter what team you are on:
1. It is a false dilemma. It forces a binary that excludes the many legitimate reasons someone can care about a policy that are neither purely personal nor purely abstract. Incentives, spillovers, administrative capacity, and effects on charities or family businesses are all valid concerns even if you never pay the tax.
2. It is a circumstantial ad hominem. The truth of a claim does not depend on the speaker’s balance sheet. “Show me your net worth” is a way to dismiss the argument by implying bias rather than engaging the substance.
3. It privatizes a public policy debate. Good arguments rest on mechanisms and evidence, not on the disclosure of private financials in a public thread. Demanding disclosure chills speech and selects for people who are comfortable self-doxxing rather than people with the best ideas.
4. It confuses conflict of interest with relevance. Disclosure can matter for officeholders or expert witnesses. It is not a prerequisite for citizens to discuss tax design.
5. It ignores indirect exposure. Thresholds move, local property values rise, liquidity rules matter, avoidance markets impose costs, and charitable giving shifts. You can be materially affected even if you are not above today’s cutoff.
6. It substitutes identity for analysis. The real questions are goals, mechanisms, tradeoffs, and guardrails. Personal exposure does not answer any of those.
7. It fails the consistency test across issues. We would not say “you cannot argue about school policy unless you have kids,” or “you cannot argue about corporate tax unless you own a C-corp,” or “you cannot argue about environmental policy unless your house is on the coast.” Same logic here.
8. It lowers debate quality. When threads move to gotchas about who benefits, people stop talking about leakage, revenue yield, step up in basis, liquidity protections for operating businesses, and compliance cost. Those are the parts that actually determine whether a policy works.
A better frame for any tax debate:
• What is the goal we are trying to hit
• What mechanism achieves it with the least distortion
• What are the administrative and compliance costs
• What guardrails protect small and illiquid enterprises
• How will we measure success and revise if it underperforms
I think that's pretty robust...
This is rather a lot of text to explain that you aren't going to answer the question. Very well. This whole discussion came about because you launched into a statement of "trust" in Democrats, which has nothing to do with the bullet points at the end. I don't see how any of the text above gets at the trust part of the equation.
Trust is about incentives, not intentions. The reason I am skeptical of Democrats on taxation is that their coalition includes highly active factions that openly advocate for very aggressive wealth redistribution, including 70 to 90 percent marginal rates, annual wealth taxes, and even 100 percent estate taxes. You can find these proposals in academic papers, on activist platforms, and from influential think tanks like the Roosevelt Institute, Data for Progress, and the People’s Policy Project. Even if these ideas do not become law tomorrow, they shape the boundaries of what the party treats as “reasonable” in negotiations.
The estate tax is a good example. Right now it applies above $13.6 million per person, but that threshold is scheduled to drop by half in 2026 unless Congress acts. There are already progressive proposals circulating to lower thresholds further, remove liquidity protections for family businesses, and even pair an estate tax with an annual wealth tax. Given these pressures, it is rational to pay attention to where the coalition wants to go, not just where the law sits today.
So it is not about believing Democrats plan to confiscate everything tomorrow. It is about looking at the coalition dynamics, the activist energy, and the policy pipelines and asking whether this is a party capable of resisting its most extreme voices when margins get narrow. Based on recent patterns, I do not think they have earned that trust.
It's called a progressive tax system, which I'm a big fan of.
Or call it the Willie Sutton principle if you like.
Lazy framing isn't especially unique to the left.
I suspect he meant that he wouldn't trust them with an expanded estate tax. (I'm pretty sure I've seen commenters *here* who say they would support a 100% estate tax.)
It is hard to trust Democrats on major policy issues when there is not a stable or unified economic vision inside the party. The coalition swings from moderates who want incremental reforms to far left activists openly calling for things like a 100 percent estate tax, and in places like mine you hear proposals that sound completely detached from any workable reality. Thresholds shift, incentives change, and those far left ideas often end up driving the debate inside liberal strongholds. Without a coherent framework or a clear sense of limits, how can anyone feel comfortable putting the entire economic agenda in the hands of that kind of chaos?
Can you actually name a far left activist who has any real power over the federal laws governing the estate tax? If anything, the carveouts and cutoffs for estate taxes keep going up and up. I think you can probably relax on this front. Also, I'm surprised to hear someone discussing the Democratic party as the ones who have no sense of limits.
The problem is not naming a single far left activist with statutory power. It is how the Democratic coalition is structured and who sets the agenda. Patrick Ruffini’s work shows that Democrats are increasingly anchored in highly educated, metropolitan voters and donor networks whose preferences are well to the left of median voters on taxation and regulation. David Shor’s research on popularism finds the same gap between activist priorities and broadly popular economic policy, which produces messaging and staff work that outpaces what elected officials can credibly deliver. Frances Lee’s research on Congress shows that narrow coalitional majorities force parties to govern through internal bargains and agency delegation rather than coherent programs, which is exactly when factional priorities bleed into policy design.
You can see the competence issue in real-world outcomes. Blue jurisdictions that dominate the Democratic coalition have the highest costs and worst delivery records on big projects anywhere in the developed world, with transit construction costs several times European norms and long delays tied to legal process and fragmented governance. That record does not inspire confidence on complex nationwide economic policy. On taxation, the federal estate tax raises only a tiny share of revenue while generating large avoidance industries and planning costs. That is why many center-left economists favor alternatives like limiting step up in basis on very large unrealized gains, which would reduce dynastic wealth concentration more effectively without creating the same distortions. The point is not that Democrats secretly plan a confiscatory tax tomorrow. It is that the coalition’s incentive structure, donor pressure, and administrative style produce a consistent pattern of maximalist rhetoric, muddled follow-through, and high implementation costs.
So my skepticism is policy based. If the party demonstrates consistent competence on cost control, delivery, and evidence-backed tax design that targets genuine windfalls without generating large deadweight losses, I am open to revisiting my position. But Democrats are not even in the running to win national power, so this fantasy conversation of what they might do is somewhat laughable.
Eliminating the step-up in basis makes sense. Though how do people even know what their basis is on inherited stock? I guess Vanguard or Schwab just keeps track of that?
"It is hard to trust Democrats on major policy issues when there is not a stable or unified economic vision inside the party."
I have had similar concerns about the Democrats for a long time, but tell me how you feel about Republicans right now in comparison?
I feel pretty bad about Republicans right now. There is no question that a large part of the party has gone off the rails, and that makes them very hard to trust with national power at the moment. But just because we have a complete mess on one side does not mean Democrats should take voters like me for granted. If Democrats assume they can do whatever they want simply because the other side is dysfunctional, they risk alienating the very people they need to build a durable coalition. If they push aggressive policies under a bad auspice, I am gone as soon as the other side gets its act together.
And here is the deeper problem: Democrats keep saying that “democracy is at stake,” but their behavior rarely matches the rhetoric. If the threat is truly existential, then almost none of these activist-driven pet policies should be the priority. The focus should be on defending core democratic institutions, building durable trust across factions, and broadening the coalition to win convincingly. Instead, what we see looks constrained by the same old playbook — chasing donor network incentives, cultural signaling, and activist wishlists — even when those moves are polarizing and weaken their ability to govern. Cultural gravity inside the coalition is strong, and it seems very hard for Democrats to escape orbit and do something fundamentally different that matches the stakes they describe.
If Democrats actually want to build a sustainable governing majority, they need to focus on long-term priorities that improve delivery, cost control, and institutional competence. That means advancing policies that are broadly popular, economically sound, and administratively feasible instead of constantly catering to the loudest factions. Every party has extremes that make unreasonable asks, but leadership matters when it comes to telling your fringes to pound sand. That is exactly what many of us wish Republicans would do with their far right, and Democrats need to show they can manage their far left with the same discipline.
The other piece here is trust. Democrats control some of the richest, most dynamic states and cities in the country, yet they also have the highest housing costs, the most expensive infrastructure projects in the developed world, and delivery timelines that lag far behind global peers. That record makes it hard to trust the coalition with even more expansive economic authority, especially when there is no unified framework for how to execute policy effectively. Good governance requires designing programs that work, delivering them at reasonable cost, and adjusting when unintended consequences arise. Without that, promises are just slogans.
So yes, I am frustrated with Republicans right now, but that does not give Democrats a free pass. If they want to earn durable trust, they need to behave like they believe the stakes they keep talking about. That means building a coalition focused on practical, evidence-based solutions, resisting performative policymaking, and demonstrating they can govern effectively at scale. Otherwise, they risk driving independents and moderates away the moment the other side stops losing its mind.
Another critical piece of institution-building is addressing voter disillusionment directly. Offering policies that large portions of the electorate do not want only deepens polarization and distrust, which makes it harder to unify the country and much harder to believe the institutional arguments Democrats often espouse. If a party claims to be defending democratic norms, then it has to focus on policies that broaden legitimacy and strengthen trust rather than alienate people further. Ignoring that dynamic undermines the very institutional credibility they rely on when making the “democracy is at stake” case.
Bro, I guarantee you the estate tax cutoff is well down the list of priorities for swing voters. I genuinely don't think it matters at all as far as persuading voters. Maybe large donors, but certainly not the average joe.
Because it is the only meaningful alternative to becoming a giant version of Orban's Hungary, except without life support from EU subsidies and with the rules of the road enforced by a bunch of masked, Christian-Nationalist-tattooed ICEmen who couldn't make the cut for other federal agencies or metropolitan police forces? It is not exactly like the alternative is Romney or Brian Kemp or Nikki Haley.
I'm for the estate tax because I believe in America. Inherited wealth and dynasties and aristocracies are un-American. The estate tax is one of the great things about America, since it works to destroy unearned inherited wealth and disrupt dynasties and aristocratic privilege.
I'm against the estate tax because I believe in America. Being able to keep what you've earned and pass it along to your children with minimal state interference is one of the greatest things about the country. It's hardly unnoticed that one of the very common features of tyrants in history is orchestrating the jailing and/or execution of their opponents on flimsy pretenses and then seizing the victims' assets for the state. It seems bizarre to claim that dispensing with the first part while keeping the second would be a great accomplishment for society.
Reframe it however you like. It's pretty obvious inheritance is the basis of aristocracy and classist societies. How could it be otherwise?
You're claiming that taxation is victimization?
If it's confiscatory rather than compensatory, which is what you appear to be advocating, then very definitely, yes.
What do you mean expanded estate tax? Do you mean for lower levels of wealth, or taxed at a higher rate? $14M is a lot, which very few people have.
I was thinking he meant lowering the dollar amount and increasing the percentage.
I agree with everything but the estate tax. Are you worried they'd break up large companies when their founders die or something? The estate tax seems to be one of the least bad taxes out there.
There are better alternatives that economists across the spectrum, including many on the center-left, have advocated for years. That would directly address wealth concentration without forcing massive compliance costs on everyone else or destabilizing business continuity. Things like tecipient-based inheritance tax that focuses on windfalls at the individual level rather than punishing capital that has already been taxed once. Both othese approaches are more targeted, less distortionary, and far easier to administer than constantly ratcheting up the estate tax.
So it isn’t about defending dynastic wealth, and it’s not about rejecting all taxation. It’s about whether the estate tax, as designed today and as envisioned by some of the most vocal factions pushing for expansion, actually achieves its stated goals without causing disproportionate economic disruption. When you look closely at the yield, the compliance burden, and the kinds of policy packages being debated, I think calling it “one of the least bad taxes” oversimplifies a much more complicated tradeoff.
"When progressives talk about the need to 'break up big tech,' how America is an 'oligarchy,' and how 'billionaires should not exist,' they are heard in the business world as saying that the United States should be more like Europe, where the largest companies have market caps that are less than one-tenth of the largest American companies. I feel like purely partisan Democrats, like my Politix co-host Brian Beutler or even Krugman, don’t think seriously enough about the meaning of this. Whatever you make of comparisons between the United States and Europe, it’s indisputable that the value of shares of stock in our companies is a lot higher — more or less by definition that’s what happens when Europe does not have big successful companies like we do."
I agree with this analysis, as well as the critique of progressive economic messaging that follows. That said, I am 100% certain that an America run by liberal Democrats would continue to be far more successful than Europe would be if it were run by Republicans. Even if the worst progressive policies were implemented, we'd still be a very large country that attracted the best and the brightest from all over the world. The main reason why Europe is sclerotic is that these are all basically small ethnostates. Yes some of them have brought in a lot of immigrants, but the basis for their existence remains the fact that they're homelands for certain ethnicities, and countries like that are just not going to be able to compete with a country where the best of all mankind come to play against each other on the same field. Maybe if you have a billion people, but otherwise not.
Market cap means shareholders get rich, but is not necessarily a good thing for the rest of the economy. It could just reflect large profit margins and rent-seeking. Tesla has 8x the market cap of BYD but BYD sells more cars and is growing its sales more. It just has lower margins so the value goes to consumers instead of shareholders.
I get your big picture point, but imo Tesla is a sort of lousy example.
At this point, Tesla is a meme stock and its valuation doesn't have much to do with its car business. It's all based on its future prospects with AI and autonomous driving. Heck, I think without CAFE credits, Tesla would be operating near breakeven or even at a loss. IMO that's likely what the future holds for them.
So while I get your point about rent-seeking and large profit margins, I don't think that's what's going on with Tesla. They're more an example of the stock market as a casino.
TSLA as a stock contains a car company and also a number of options (in the financial sense). These options include its forays into AI, Robotics, Autonomous Driving, Robotaxis, possible future EV mandates, some Elon-specific unknown possibilities. Those options drive its value more than the current car company does.
Likewise with BYD. Though the non-vehicle options there include more negative value options due to the structure, standing and behavior of the Chinese Communist Party.
There's also a mechanical financial issue here, which is that BYD (like most Chinese companies) is dual listed in Shenzhen and Hong Kong, and the Shenzhen shares are not freely tradable by international investors, while domestic investors are pouring money into those shares. There is persistent fear that the H shares (traded in Hong Kong), while technically legally equivalent, are implicitly a long term investment in the continued existence of Hong Kong's separate legal and financial status, which results in them being depressed relative to mainland shares.
Also, don't a lot of folks' home solar setups use TSLA batteries for storage?
Speaking of which, maybe there's at least one silver lining in about Trump getting rid of renewable incentives - the end of the incessant, pushy, door-to-door home solar salespeople. grrrrrr
Yes, TSLA is the new Pets.com.
That’s true (and also not good for consumers) but it also reflects an expectation that if Tesla is able to crack autonomous driving it’ll be able to earn large profits from it, rather than have them competed away or open-source things.
Biggest handicap for Europe is the lack of a common capital market. Each country having their own little stock exchange is holding them back. They know it but won’t do anything about it
I believe that Europe's labor regulations and high taxes are probably a bigger reason why Europe is so much poorer.
"...rebuilding educational and cultural institutions from the ground up in order to celebrate individualism and meritocracy."
Individualism. Meritocracy.
/looks at the collection of sycophants, lickspittles and toadies Trump has elevated to positions of power, not to mention the glorious celebration of individualistic meritocracy evidenced by GOP Senators and Congresspeople today
/blinks slowly several times
/brain short-circuits trying to decide whether to laugh hysterically or burst out sobbing
I think today is a day when, for my own sanity, I need to stay away. I've got lots of work to catch up on before drosophilist jr. is born in any case, have fun everyone, I'll see you all tomorrow.
My one consolation is that the true MAGA believers who worship Trump for bringing back "individualism" and "meritocracy" 🤮🤮🤮🤮🤮🤮are outnumbered by disengaged normie voters who don't pay attention to the stock market but who do notice that a jar of instant coffee that used to cost $7 at target in November now costs $11, and are pissed off about it.
"Meritocracy," like Trump amassing $5B by scamming the public with his crypto b.s.
Yeah the average conservative's version of Merit means 'has a bunch of money' or 'has a daddy with a bunch of money'.
Good luck with the young fruit fly!
Think a few things you’re leaving out here.
- Think you’re underrating the fact that summer and specifically August might be the worst time whether to judge if the stock market is accurately reflecting underlying conditions in the economy. In my office, I half joke that we should take bets on how far the market will go down on day after Labor Day. Reason being a whole bunch of Hedge Fund managers are vacationing in the Hamptons and day after Labor Day a bunch of them are cycling out of whatever positions they are in now that they are back in office. This specific idea is half baked and kind of in jest. But post Labor Day sell off is a real thing. And I do actually think there is something to be said for the idea at that the summer is much more reflective of “retail” investor activity then rest of the year.
- think you’re underselling that in your own post you show Trump’s actions are really only good for the “Magnificent 7”. These companies are holding up the market now but how long can that last. Every day seems to be another story of a business owner who didn’t realize their business would be severely impacted by tariffs (think we underestimate how many small business owners don’t understand the big picture of how their business actually works). There a lot of signs that businesses have held off price increases but are at a breaking point and will have no choice soon.
I think point being you’re really underselling possibility we’re at the calm before the storm here.
If you believe this, you have an incredible opportunity to buy some puts and make a killing.
100% if I was more inclined to be a risk taking investor. In general, I'm pretty on board with the invest most of your money in index funds strategy. While I think the scenario I laid out is genuinely likely, do I know the market downturn will happen next week, next month, next 3 months (as I noted about Labor day, Dow futures show market opening down, but besides the fact that I'd almost never take one day movement in stocks as indicative of anything, I laid out banal reason stocks may go down today)? If you look at that Krugman post, the data he has (and links) indicate there were warning signs a good 1-2 years out from the day when Lehman collapsed.
And of course the other factor is as Matt laid out, Trump is a lunatic who may actually turn on a dime if stock market really starts to plunge. Do I really want to have a put option for say September 20th, watch market tank next two weeks and then watch Trump completely reverse himself on the 19th in response because this absolutely something he might do? Again, I think a lot of his tariff back and forth stuff is pretty baked in to the short and medium term economy (how do you make any investment decisions, how do you know Trump won't reverse himself again like he did this summer if market goes back up again. There's just no way this doesn't have some sort of impact). But in theory markets are forward looking, if he does reverse himself in like two weeks, markets booming again is not that irrational.
Also, it seems pretty clear Trump had some sort of medical issue the last 3-4 days. The "Trump's dead" stuff was absurd from the beginning (there's just no way to cover that up for than an hour or so), but the lack of public appearance, the only picture being a grainy one far way, the various photos of him golfing on the weekend which were actually taken weeks or months prior, just tells me the "Occom's razor" explanation is he had some sort of episode requiring serious medical attention. Point being, I don't think it's progressive "hopium" to say there may be a serious medical concern going on with Trump right now. How do you price that in to a trade?
I call BS. You could spend a modest sum of a couple hundred to a couple of grand betting on your theory and get a nice chunk of change without taking a bunch of risk to your overall financial health. I don’t think you really believe it, which is why you won’t make the bet and get free money to buy a nice dinner or ten.
Downvote. There are all sorts of investments I personally don't make no matter how promising the return looks because the time/expense of trying to figure out how to do it in the first place combined with the tax implications don't make it worthwhile from my perspective for the small dollar amount I'd be likely to earn.
Could also be a lack of know how. I have to idea how to “make some puts” and I’m not sure my meager investment account even allows me to do that kind of trading. I see that I can buy and sell stocks and index funds and what not. No clue how I would actually make a bet on anything other than buying a stock I thought would go up or selling one I owned if I thought it would go down. That may not be Colin’s problem but it would certainly be mine!
Exactly! I know in theory what a "put" is, but I have no idea how to intelligently make one, etc. Especially when all of my investments are in IRAs.
It's more the risk.
I would say I've been somewhat vindicated today so far looking at the market. But god only knows what happens after 2 PM. I'll reiterate that while I don't believe the "Trump's dying imminently" stuff, I do think there is a real question as to his health. If after 2, there's even more questions about Trump's health there is actually a base case that stocks soar. There's almost certainly a "mad king" premium built into inflation expectations and volatility generally. If there is any indication that Trump really is in serious trouble and that Vance might be taking over sooner rather than later, that's actually a strong case that inflation expectations may come down, 10-year goes down and stocks soar on possibility of rate cuts purely because even if Vance continues some of Trump's tariff policy, he's not actually an insane person likely to whipsaw on tariffs one day to the next based on something he saw on Fox News.
Now to me mostly likely scenario Trump is going to look worse for wear due to some sort of weekend medical operation but still look and sound himself and we'll all move on to whatever new crazy thing he wants to next (likely put National guard in Chicago). But my point is tail risk. Call options are risky as anything. With "naked" calls, your downside risk is enormous. I'm not going to put my life savings at risk even if that risk is only like 5%.
Yes, the "lack of know how" was what I was referring to about the time/expense trying to figure out do it in the first place. For example, I know what shorting a stock is, but I have no clue offhand how I would do that and I don't even have a brokerage account. So while, for example, I might see a horrible news story about a company where it seems really likely that its stock price will drop in the next 24 hours, I'm not in any sort of position to exploit that, and that's even before getting into the question of whether I could make enough on such a deal to compensate for the resulting complications in my taxes.
Market's been open 40 minutes and the Dow is down 1.2%. If I had read this two hours ago I'd be rich!
How does one even do instantaneous trades anyway? I've been burned, not heavily - just didn't end up making anything when I would have if the transactions had gone through when I wanted them to - trying to time dips and bouncebacks. My investment accounts just take forever to sell and buy stuff. But it's a big stodgy firm that mostly does mutual fund retirement accounts, which was what I was working with.
Caveat that one day moves in the market vast majority of the time not indicative of anything medium to long term.
But from AI (again take with a grain of salt):
Yes, trading is often lighter in August compared to the rest of the year, although this is more of a historical trend than an absolute rule. This phenomenon is sometimes referred to as the "summer doldrums".
Several factors contribute to this pattern:
Summer vacations: Many institutional traders and other market professionals in the US and Europe take vacations during July and August. With fewer active buyers and sellers, trading volumes and overall market activity tend to decline.
Reduced market catalysts: The summer is generally a quieter period for market-moving events. Major quarterly earnings season has passed, and major economic reports or central bank decisions may be less frequent. This relative lack of news gives traders less incentive to make significant moves.
Impact on volatility: Because there is less trading volume, large price swings can occur more easily, as a smaller amount of capital is needed to move the market. These movements are not always indicative of a new trend but can signal a "false break". Volatility, as measured by the VIX index, has also historically tended to rise in August.
Caveat that one day moves in the market vast majority of the time not indicative of anything medium to long term.
But from AI (again take with a grain of salt):
Yes, trading is often lighter in August compared to the rest of the year, although this is more of a historical trend than an absolute rule. This phenomenon is sometimes referred to as the "summer doldrums".
Several factors contribute to this pattern:
Summer vacations: Many institutional traders and other market professionals in the US and Europe take vacations during July and August. With fewer active buyers and sellers, trading volumes and overall market activity tend to decline.
Reduced market catalysts: The summer is generally a quieter period for market-moving events. Major quarterly earnings season has passed, and major economic reports or central bank decisions may be less frequent. This relative lack of news gives traders less incentive to make significant moves.
Impact on volatility: Because there is less trading volume, large price swings can occur more easily, as a smaller amount of capital is needed to move the market. These movements are not always indicative of a new trend but can signal a "false break". Volatility, as measured by the VIX index, has also historically tended to rise in August.
On the Magnificent 7 point, in a lot of ways it sounds like we're turning into Europe in the sense that a handful of companies drive economic activity. At least Nordic countries have the excuse that they have small populations, so any Nordic multinational is by definition going to account for a large share of GDP.
"think we underestimate how many small business owners don’t understand the big picture of how their business actually works"
I think it's more that these businesses don't realize that the American businesses they buy from import a lot from China
I mean not having a great understanding of your business' supply chain I think supports my contention.
I don't say that to be like business owners are somehow stupid or don't know anything at all about their business. If they survived some length of time as a going concern, going to give the benefit of the doubt that you know something about how your business operates. But I do think if you read news articles there's often a lot of interviews with small business owners about how some new tax will effect their business or how some new regulation will impact them. And I think we should probably treat these anecdotes with a grain of salt.
Looks like you called the market today (so far).
A lot of weird false equivalence here. But that aside count me in for wanting more technical economic writing! Only so many posts on how the democrats need to moderate that I can read.
I made this point last year and I'm trying to remember the example I had used, but I think Democrats sometimes needlessly antagonize business. To be clear, Americans are NOT libertarians, and have zero qualms about regulating business in heavy handed and stupid ways (like Trump is wont to do) IF there's an obvious reason to do so. I have yet to see the upper bound on what sort of minimum wage hikes the public will support. The public is a big fan of "force my employer to pay for stuff for me." They think that's free, and obviously it isn't, so policymakers have to be careful with that dynamic. BUT, what does NOT follow is that Americans are just hostile to business in general. I remember what it was now, the "break up Amazon" thing. Nobody cares about that. All threatening to break up Amazon did was frighten Amazon. Nobody was energized to vote by the prospect of breaking up Amazon.
Democrats COULD pick up a decent chunk of the business community if they wanted to. They don't need to say "we'll give you a bunch of tax breaks and legalize pollution." They just need to convincingly declare that they're better for economic stability than the alternative and that all they want to do is enforce basic environmental and labor laws, and that any business that is in line with those doesn't have anything to fear. Problem is that it would take a while to earn that type of trust, because when they're in power, they kick business for no reason or at least threaten to.
Tesla is a great example. They were endlessly harassed by the Biden administration because they aren’t unionized. Some of it was legit, but it was the kind of stuff I’m sure also happening at the big 3 but not a priority for Biden because of his attempts at union support.
Financial services is another one. JPM and others were just endlessly harassed by the regulators last time around despite doing the administration favor after favor. Jamie Dimon fucking hayes Trump, by all evidence Trump hates bankers, but he’s still by some distance the lesser evil because you don’t have a ton of dim and vicious Warren acolytes trying to fine you 2 billion dollars because your loan book is 12% African American and not 13%.
And Biden bent over backwards for unions and it got him nothing.
I think the lesson is industrial unions are no longer part of the Democratic coalition. Just public sector minus fire and police.
Wow, great incentives that creates.
Democrats, unfortunately, don't have a central animating figure who can excommunicate the neo-Brandeisian psychos, and so there is nothing "the Democrats" can do to prevent those people from saying they want to destroy all large companies while also being Democrats.
It's gonna be a big tent that includes some full blown socialists, but whoever gets elected next doesn't need to wage a low level war on mostly popular companies for no reason.
I just wish Seattle would stop pissing away some of the greatest blessings any city has ever been fortunate to have by unnecessary antagonizing business. I just hope the draw of the natural beauty and quality of life is enough to keep our industries here. But the same folks who antagonize business harm us on the QOL front, too.
There were a couple regulators in the FIRREAs who legitimately think that any profit is a crime.
I think a lot of the destructive stuff happening is long-term destructive, but not so bad short-term. Cutting/disrupting research funding doesn't hurt us this year, but it probably makes us poorer twenty years from now. Convincing the most ambitious and smart foreigners not to come to the US for school and stay to start a business doesn't show up on this year's GDP numbers, but again, twenty years from now it probably makes us poorer. Dicking around with the reliability of economic statistics and the independence of the Fed will cause us a lot of problems in the next decade or two, but probably not this month. And so on.
So . . . let's get this straight. The U.S. equity markets went up 23% in 2024 and 24% in 2023 but investors and business people think Biden was as bad as Salvador Allende and Kamala Harris might as well have been La Pasionaria! And the same businesspeople who once professed to believe in Eugene Fama and hard-form efficient markets theory are now such vibey snowflakes that "they believe left-of-center parties are full of socialists who don't like businesspeople, and they fear any sign that those people are calling the shots". Isn't this just an elliptical way of saying, "businesspeople are dumb and markets are dumb"?! Or at least that they believe dumb, or certainly heavily caricatured, things? Good grief, I count myself a liberal and I certainly don't believe either of those things! If in fact businesspeople and investors can't see through the persiflage of rhetoric to at least try to get through to what is really going on in the world and how it affects the discounted view of the aggregation of future prospects of listed enterprises that comprises the "market", then that is actually a really interesting and potentially more disturbing story than "MAGA likes Trump" and "Libs are all pinko commies". Maybe it's just that the U.S. is, still, functionally the only meaningful potential source of long-term return for global investment, and Adam Smith's observation about there being a lot of ruin in a nation is still calculated to have a long way to run in the U.S. Or . . . maybe not, and Mr Yglesias is right and I'm just hopelessly naive! Which frankly would scare me beyond words about the prospect of the return of rationality to the United States!
As Keynes said, "The market can remain irrational longer than you can remain solvent."
It's mystifying to me why people think a Republican president is better for the economy. That hasn't been true since Reagan!
It's not that they are better, it's that in theory there is less substantive risk. If you elect a Democrat, there is a higher chance that they are going to be lobbied by the far left to enact destructive fiscal policies for growth. The right is friendly to business (even if everything else burns).
I suppose that's true over the long term, but Trump has been talking about tariffs since the 1980s and made a big deal of them in 2024. The business community collectively decided to pretend he wouldn't do them.
immigration restrictionism is about as straightforwardly destructive to growth as it gets.
Great point. There were literally Mass Deportation signs at the convention!
One thing I've noticed in the real estate investing community is that... most real estate investors are not very smart. I've seen some unironically calling for Powell to be fired as if that would lower interest rates instead of the opposite. Others want to end the Fed altogether and don't grasp how that would collapse asset values.
I don't think this is true.
Wasn't true during Reagan, either. Volcker broke stagflation and was a Carter appointee. But at least AIUI Reagan didn't try to mess with the independence of the Fed.
Definitely better for the tax rates they have to pay. And for keeping those obnoxious OSHA folks out of their workplaces. So on net for businessmen: yay Republicans!