Multiverse of Mailbag
TV shows that should've been movies, Schumer decisions that didn't make sense, and more
I find it baffling that congressional Democrats managed to craft federal abortion legislation that divides their party while uniting Republicans in opposition. It’s unlikely that anything could pass the Senate no matter what Chuck Schumer did, but that makes it all the more ridiculous to prioritize purism over writing something that Joe Manchin, Susan Collins, and Lisa Murkowski all vote for while highlighting the extremism of the mainstream Republican position on abortion rights.
Their position is genuinely very extreme; losing elections to them and letting them enact their agenda is very bad. Democrats’ legislative strategy needs to be focused on highlighting that and winning.
On to this week’s questions!
Kate Hall: You know a lot of smart people. I’d like to know if anyone can make a legitimate argument for the value of bitcoin and other digital currency. Yes I know that all money is make believe, but in what world will the faith and credit of a bunch of anonymous online bros with a blockchain ledger going to be more reliable then the US, EU, UK governments. And if bitcoin isn’t a legitimate currency what the heck are you investing in? It seems like the worlds biggest tulip mania to me (although at least you got flowers out of that one) but so many people who are smarter than me have invested millions in it, so what am I missing?
Here’s a de minimis case for crypto: all the gold in the world right now is worth about $11-12 trillion. At the time I’m writing this, all the crypto in the world is worth about $1.38 trillion.
So what’s gold good for? It has some minor industrial applications. It’s also widely used in jewelry, but not really because gold jewelry has important functional attributes. I wear a gold wedding ring because wedding rings are an important symbol in American society and gold is a traditional material to make a ring out of. A lot of people with sort of cranky views about monetary policy hold gold as some kind of inflation hedge, and sometimes cynical traders buy gold because there is an observed pattern of the price of gold going up when people worry about certain kinds of things. Gold is also a store of value that you could steal (like in “Die Hard With a Vengeance”) or use for crime because the gold can always be melted down and anonymized. But gold is pretty awkward for crimes. There is $1.2 trillion worth of paper $100 bills circulated, mostly in foreign countries, and the authorities think a lot of it is for crime.
So I don’t think it requires you to be super-bullish on crypto to say that due to generational turnover, future inflation cranks may want to hold it. From the standpoint of crime, it has some technical superiority over paper bills and gold bars. NFTs are not in any particularly clear way “more useless” than gold jewelry. Some of the enthusiasm is just people speculating for the sake of speculating, but lots of people make money running casinos. So if cryptocurrency also helps settle certain classes of financial transactions more quickly or fill a few other niche uses, it’s easy to imagine it surpassing gold in the future.
John from FL: What is the best way to fight against regulatory capture across the US? I'm thinking of regulations and exclusionary hurdles which largely serve to protect incumbency. Covers a variety of markets like car dealerships, realtors, hairdressers and all sorts of professions where licensure isn't being used to protect the public but to protect existing players.
Are there non-profits where contributions could make a difference? Or crusading politicians who could use some help?
Governors Jared Polis (D-CO) and Doug Ducey (R-AZ) are, as far as I know, the two standouts here. If you’re interested in this topic, I would recommend following Shoshana Weissmann on Twitter. The Niskanen Center has a whole “captured economy” program that is largely about this, so if you know anyone with the capacity to give them large sums of money, I would recommend that for sure. Since the car dealership angle directly impacts Telsa, maybe everyone should tweet about it and tag Elon Musk and try to get him to do more posting and advocacy since that would drive a ton of media attention.
More broadly, I always encourage everyone to remember that there is more to life than high-profile, high-polarized, super-ideological politics. Write to your state legislators and tell them you care about this stuff. Some of them might listen.
James Schapiro: What do you make of the fact that in “Dr. Strange in the Multiverse of Madness,” there don’t seem to be any in-universe rules for how different weapons work against each other? Most of the fighting in the movie is all based on magic: the characters shoot different colored lights at each other, and the audience has no idea how those lights work or what they’re made of or how strong they are, so no one really has any idea how a given conflict is going. Do you see this as a step down from earlier MCU movies, when it was pretty clear how all the weapons worked (a big hammer, a bouncy shield, arrows, etc) and how powerful they were, so the outlines of a given battle were much clearer?
This is part of my general complaint that the MCU movies don’t seem to take their own premises very seriously.
John MGK: Back in February you did a podcast with Robert Wiblin where you set out (hopefully this paraphrase seems fair) the following thesis: The US and its allies aren't really willing to go to the hilt for Ukraine, and so it would be better if we were more honest with them about the limited nature of our support and act accordingly. Does the surprisingly vigorous and united western reaction + the much more effective than expected Ukrainian defence change that calculus?
I had this wrong, and the actual error turned out to be the reverse: western leaders failed to credibly convey to Putin how far they were actually willing to go to help Ukraine. I think in particular the leaders of Germany, Finland, and Sweden have surprised themselves somewhat with how much the war has transformed their domestic political situations, which has then reset the baseline for France and the UK.
Meanwhile, Joe Biden has both handled the military and diplomatic situations very well and also been surprisingly willing to sacrifice his personal political standing (by deliberately increasing inflation) and domestic legislative priorities for the sake of his Russia policy. I think people will be arguing for years or even decades about whether this was wise statesmanship or a kind of folly. In terms of other things Matt was wrong about, during the 2020 primaries I did worry a lot that Biden would be excessively invested in the Biden foreign policy agenda, but I also thought the Biden foreign policy agenda would probably be bad — I think it’s actually been truly excellent, but he really has prioritized it in a way that’s unusual for a first-term president.
Thomas L. Hutcheson: I'll be a little more polite in asking about the origin of Matt's views on [nominal GDP level targeting]. He has not mentioned Scott Summer or David Beckworth as influences, people who as far as I know more or less came up with the idea. Did he come to the ideas otherwise? And how far does he do with them? Should the Fed crate a NGDPL futures market for guidance? As a platform for intervention? Would they use nowcasts?
I didn’t know this was a secret, but I’ve been a proponent of Scott Sumner Thought for a long time. Here I am in the comments section of his blog in 2011. Scott liked the comment. I told the Atlantic that Sumner and Beckworth were two of my must-read economics writers. I’ve been on Beckworth’s podcast not once but twice.
I’d like to see some philanthropists come together and try to create an NGDP futures market because I think that if one existed it would start getting cited in the press and academic articles and would naturally become something the Fed pays attention to. Right now, it’s very unclear how we’re supposed to interpret flexible average inflation targeting (FAIT) in practice, and an NGDP futures market — if one existed — would create a set of facts that would be a natural reference point for FAIT implementation and set us up well for the next framework review.
oboynton: What are your thoughts on the democrats' “tactic” of bringing bills to the floor that have no chance of passage? This week, with abortion, earlier with Voting Rights...maybe others. Do they think their base cares about the symbolic effort, or is there some other intended outcome?
Holding show votes on message bills is a time-honored congressional tradition.
But recently I think Democrats have mostly lost sight of the purpose of doing this. Sometimes in life people favor a policy idea on the merits, and then other people worry that the idea is politically unsound. Classic legislative calculus is that you sometimes put the unpopular provision in the bill anyway because it’s good on the merits. But if the bill is clearly doomed — thanks to the filibuster or a presidential veto or whatever — then you leave out the unpopular stuff and just move a message bill. Democratic leaders have started totally ignoring public opinion and saying that in a “message bill,” you give the groups everything they want and don’t think too hard about it because it won’t pass anyway. Then if you’re actually just one to two votes short, you maybe cut a deal with Joe Manchin to get it over the top.
Classic message bill thinking would say you don’t start with the groups’ vision of codifying Roe, you start with a bill preempting state law to create a rape/incest exception to abortion bans. That might even pass. You hold the vote on twelve weeks. Choice groups can and should push for more than that, but in a world where bills aren’t going to pass, you use control of the floor to focus the agenda on your most popular ideas.
Brad: Are there any mediocre (or even bad) movies you can think of that you think might be pretty good if they were redone as an HBO-style 10 episode series?
I rarely see a bad movie and think “boy, I wish there were more of that.”
The few exceptions I can think of are adaptations where, for example, there have been several Moby Dick movies over the years but none of them are very good — it’s crying out for a limited series, and you could say the same about a bunch of other giant 19th century novels (Anna Karenina, etc). Dune Part I was not bad or mediocre, but it is a little bit structurally odd, and I think arguably the optimal way to tell this story is as a season of television followed by a second season adapting Children of Dune and Dune Messiah.
These days, though, I think a lot of projects misfire in the opposite direction. The recent spurt of “ripped from the headlines” shows about Theranos, Uber, and WeWork have a lot of good qualities, but I mostly could’ve done with everyone putting in more effort to craft a sharp, tight, movie-length script. Even more so, “Ozark,” which I’m wrapping up now, could have been a really cool, somewhat-grounded thriller instead of a kind of ridiculous four-season television show.
Baseball mom: Hi Matt. I know Chuck Schumer is not a fool, so why do you think he is refusing to compromise on the most important legislation of our time - the one where, as you point out, it is so important that we simply must win? Do you think he has a real, competing, secret strategy? It’s hard to believe he’s willing to lose everything because of being stubborn.
I don’t think I know anything about politics that Chuck Schumer doesn’t know. As I’ve said before, I was an intern in his office and learned a lot from him and his staff over the years. I would not wholly endorse every word of his 2007 book “Positively American,” but I think it is very much in the right spirit.
But what makes Schumer such an effective politician when he wants to be is that he’s by nature a people pleaser. When people really wanted him to deliver a large Senate majority by any means necessary, he did a good job of that. Right now, I think Schumer is doing a bad job of setting priorities, getting things done, and helping Democrats look popular. But from where Schumer sits, Schumer is doing a good job of having people not be mad at Chuck Schumer. He’s not facing a primary challenge in his home state, he’s not at risk of losing a general election to a Republican, he’s not facing a challenger from inside his caucus, and he’s successfully gotten the groups to be mad at Joe Manchin rather than at him. So I’m disappointed in him, but this also reflects a lack of decisiveness from the White House (which certainly can be decisive when it wants to be, as on Russia) and frankly bad ideas in the funder community.
Doug Orleans: If you could use a time machine once to influence history, what would you do? Most people answer this question with something they couldn't realistically do (e.g. kill Hitler, prevent Trump from running), but I mean something that you would actually have the means to do safely and for certain, without risking injury or being noticed.
I think the fun answer is that I’d try to go to Sarajevo in 1914 and try to stop Gavrilo Princip from shooting Franz Ferdinand. This seems a lot easier to get away with than murdering Hitler — I think you could probably stand around on the right street corner, spot the guy, and then accost him saying you saw him concealing a gun and he’d be stopped. Still, there are a lot of ways this could go awry — I’m not really sure how accurate the contemporary maps of the assassination are or how good I’d be at recognizing Princip, and while I think disrupting the plot would stop the war from breaking out, it’s possible that it wouldn’t.
A more feasible plan would probably be to head back in time and use my knowledge of future trends to become a rich investor who not only wields influence through his money but also has a reputation for being really smart because I made so many good calls. There are lots of good things you can do with money.
Nicholas Sooy: What are some areas where you think European policy is superior to American policy? What are some areas where you think American policy is superior to European policy?
I’m going to be annoyingly literal about this question and talk about issues that are inside the European Union’s sphere of competence and ignore national-level questions about comparative welfare state design.
So two good EU ideas:
The European Medicines Agency works as a pure safety regulator and leaves price regulation up to member states’ healthcare systems. The FDA is supposed to be a safety regulator but also serves as a de facto national price regulator in a way that tends to make them too stingy with approvals but also sometimes leads to Americans overpaying for low-value treatment.
To promote European solidarity, the EU created the Erasmus program for students to study at foreign EU universities. They wanted to make this like a genuine “go to college in a foreign country” experience and not a low-quality study abroad program, so they needed to create a continent-wide standard for assessing course credit to facilitate clear comparisons between courses taken at different universities in different countries. That has a lot of benefits beyond Erasmus.
Conversely, while I think there have been some implementation failures with the consumer welfare antitrust standard in the United States (Trump allowing the Sprint/T-Mobile merger was an egregious failure, and the Obama administration allowing Facebook to buy Instagram was in retrospect a mistake), it is conceptually much sounder than the EU concept of prohibiting conduct that is unfair to other businesses.
MG NYC: A family has $60k to spend or save. From an (American) societal perspective, what is the best single use of that money? (I know $60k is a one-percenter figure, but I'm using it so that choice H below can be included):
A. Save it (bank account)
B. Invest it (S&P 500)
D. Spend it (i.e., put money into the economy)
E. Renovate home or buy new car or other capital investment
F. Charitable contribution
G. Campaign contribution to favored candidates
H. Create a job (hire or continue employment of nanny, housekeeper, assistant)
I. Pay $60k in extra taxes
Start with A vs. B. It’s good to have some cash savings on hand if you can so that you can meet emergency expenses without needing to liquidate other investments and incur tax liabilities. But there’s no social benefit to holding cash vs stocks.
From the standpoint of personal prudence, it’s probably always a good idea to do an occasional spending audit and think of forms of consumption you might want to cut out in favor of increased savings — which should probably be an index fund or a target-date retirement fund. And in an inflationary environment like today, that’s a moderately pro-social undertaking. Especially if the consumption you cut back on relates to supply-constrained categories and double-especially if it’s oil and natural gas that fuels the Russian war machine, “drive less and put the savings into the stock market” is a kind of surprisingly socially beneficial thing to do.
By the same token, “putting money into the economy” is not great right now. But if you want to engage in mindful consumption, think of buying things that are probably not supply-constrained at the moment — tickets to see non-Marvel movies, lunch or coffee in a downtown business district, etc.
Donating to down-ballot candidates is always good. Especially in the $60,000 scenario, I would consider trying to make a smaller number of larger donations to try to get the candidate’s attention — and send a note telling her she should read Slow Boring and adopt better policies and a more moderate, popularist approach to politics. Job-creating is probably not great in a generic sense, but providing employment opportunities to people from strongly disfavored groups (reentering prisoners, the long-term unemployed, recovering addicts) has a lot of benefits.
Paying extra taxes helps drain domestic demand, but sending your money to the GiveWell Maximum Impact Fund where it can save lives in foreign countries accomplishes that, too, with much greater benefits.
Steve Botsford: I’ve always been interesting in your idea of having the federal reserve provide stimulus through bank accounts held at the Fed. What pushback logistically or based in macro have you heard back on this idea?
The reference here is to Morgan Ricks’ proposal to have the Federal Reserve give individuals checking accounts, which could then be used for, among other things, direct cash transfers as a stimulus program. There is no good pushback against this idea, just vague ideas that because a lot of the time the government does things in an incompetent way, they would do this in an incompetent way too. Or that it would somehow make the Fed too political.
I know I have some Republican readers here, and what I really want to say about this is that far and away the best method for ensuring that some “sounds nice but in the real world it’ll be a horrific lib boondoggle” idea from the left does not turn into a horrific lib boondoggle is to get some Republicans to write a bill implementing the idea. Republicans do not like lib boondoggles, so they will make sure to scrutinize the language and make sure that the Fed Accounts bill is just a Fed Accounts bill and not a bill that also tries to promote labor unions and curb fossil fuel consumption and end racism. And then if Democrats who like the idea are aware that there are Republican votes for it, they don’t need to persuade 100 percent of their colleagues to back it and make sure that the idea checks every interest group box. By contrast, when Republicans preemptively decide anything Democrats propose is bound to turn into an intersectional coalition disaster, that becomes self-fulfilling. Just go run with some good ideas!
Sam S: What do you think would be the best "automatic stabilizers" for the economy or for society these days? I loved some of your earlier work on this (like the podcast with Claudia Sahm) and would like to hear an update.
Brookings put out this great compendium of fiscal stabilizer ideas called “Recession Ready” back in spring 2019.
When Congress wrote the CARES Act, they copied some of the themes from this document (Sahm’s direct payments as zero lower bound stimulus became the pandemic relief checks for example), but they didn’t actually do automatic stabilizers. But they should have! If they’d made relief checks and bonus UI contingent on the state of the economy, we’d be in much better shape today. Ironically, Republicans didn’t like that idea because they thought it would mean more spending, but looking across the whole cycle, it would’ve meant less spending — and also Trump maybe would have won reelection.
The lesson of both 2009 and 2021 is that doing discretional fiscal stimulus correctly is both very important and nearly impossible for Congress to pull off, so we should make things automatic. My favorite ideas are the direct cash transfers and automatically varying the federal Medicaid matching rate, both pegged to changes in unemployment.
Jdobb: Wizards, let's go. Are you re-signing Beal to supermax? Trade him and do a proper tank? Hope he takes less than max and muddle along? How are we getting off wheel of mediocrity?
Nobody likes to risk seeing their star walk, but I think teams need to be incredibly cautious with these supermax deals and Beal is just not that good.
I wouldn’t be opposed to giving up and rebuilding, but I sort of hate the concept of “tanking” because I think it tends to be a cope for teams that just aren’t managed very well. You can imagine a team that is objectively doing a good job of finding value with low draft picks, but just can’t win a championship because the best players are never on the board when they pick. That’s a treadmill of mediocrity. But is that the Wizards? I think the Wizards have signed bad contracts, traded away draft picks to get out from under bad contracts, squandered some high picks on players who turned out to not be particularly great, and never shown any real ability to discover value with low picks. That’s a badly managed operation from the standpoint of evaluating talent, and you’re not going to tank your way into greatness.