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In the same way that excessive cynicism about politician corruptness paved the way for an extremely corrupt con artist like Trump to win, I think that excessive cynicism about fiat currency has paved the way to people getting scammed by con artists in crypto as well.

So rather then attack crypto let me defend fiat currency against the idea it’s just make believe. Every year you have to send the US Government dollars in the form of taxes. If you don’t send dollars men and women with guns will show up at your house and throw you in jail. The entity that does this runs the most powerful military in history. That government also has proven to be stable over a long time and is able to back its promises by taxing the wealthiest society in history. And of course the banking/currency/means of exchange/etc are extremely sophisticated. Did you know at the click of a button you can transfer cash on Venmo with no gas fees? At some level this is all “socially constructed,” but in a way that is extremely robust beyond everyone deciding to believe it one day.

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Another one is people always worry about the Fed “printing money.” Well the Fed just announced a plan to reduce its balance sheet by $100 billion a month.

What people don’t realize is that when the Fed sells $100 billion with or treasuries and mortgage backed securities, the money they get doesn’t sit in an account somewhere - it ceases to exist. To use the printing metaphors - it’s been shredded.

The Fed buys securities by summoning forth dollars from the electronic ether and when they sell those securities those dollars vanish back into the electronic ether from whence they came.

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Well that's not quite right. The Fed isn't selling all those securities. Rather they have such a large amount that there is that much and more maturing each month. They are declining to reinvest those matured securities. However there needs to be new buyers for those securities, since Treasury really just rolls over all its debt. With fewer buyers for those Treasuries the yields need to go up to attract investors that would have bought something else, causing rates to rise and pulling money out of whatever the other thing investors would have bought if the Fed had still been buying.

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May 13, 2022·edited May 13, 2022

“ They are declining to reinvest those matured securities.”

Exactly. The securities mature, the treasury pays the Fed in full and those funds cease to exist.

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Amusingly I think the current circumstances more or less prove the NMT people right. So long as public debts continue to creep up in a manageable level, governments make good on current payment obligations, and not enough money is pitched over into the real economy to spike demand like the last several years, we actually can just keep the plates spinning indefinitely.

Now that we know what doesn't work, we can probably keep it up for another century, lol.

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Comparing crypto to gold, as the post does, is a nice debating trick but I don't think it holds up. Gold doesn't make "sense" now but it did (and to a degree still does) because of the millenia during which it was recognized as the best store of value. (Planet Money did a great episode on why if you're going to use a material object as a store of value, gold was the hands-down winner: https://www.npr.org/sections/money/2011/02/07/131363098/the-tuesday-podcast-why-gold). There's a deep inertia to social structures and one can argue that the jury is still out on the johnny-come-lately of fiat money compared to gold, just based on longevity.

Gold in a way is like religion. If you interrogate it too closely you may weaken the foundation of it, but just because generation after generation believed in it, for that reason alone it was successful and you tended to believe in it because everyone else did, century after century.

Crypto has nothing like that. Maybe if it's still here in another century. But until then, it's just a crazy libertarian bro fantasy that, like GameStop, has hoodwinked all kinds of people into throwing their life savings into the latest craze.

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I think there are three different issues (I'm using crypto and bitcoin somewhat interchangeably):

1. Is crypto a good substitute for gold? This is plausible since it is purely a collective delusion and it remains to be seen who wins the argument the bitcoin maximalist do or the crypto skeptics

2. Assuming crypto is a good substitute for gold what is the expected percent of golds market cap it will substitute for? It's likely not a 100% substitute let alone a 200% substitute but is it a 10% substitute or 50% substitute. If it is a 10% substitute then we should expect long term price stability (with high volatility) around the current value so future returns are likely to be small. If its a 50% substitute we would expect it to exceed its previous highs but not much more.

3. Assuming crypto is going to be a substitute for gold at ~10% substitutability what percentage of your portfolio should it make up? This will depend on your personal finances but I would guess that crypto+gold should make up at most a few percentages of a well diversified portfolio.

The past few weeks have definitely made me more bearish on crypto in general (from an already pretty bearish position) and more bullish on bitcoin and etherium specifically.

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I agree that crypto discussions usually suffer from a lack of competitive analysis. If you're really comparing it to the alternatives and not just trying to justify a use case for a fun new tech, crypto implementations are almost always far worse than something else.

Matt's answer on crypto was unsatisfying because it ignores the fact that permissionless blockchain-based crypto is an absurd solution to a virtually nonexistent problem. Crypto is supposed to enable transactions that do not require trusting others, but can only do so by contorting the term "trust" beyond recognition, and even then only by introducing fatal and unavoidable downsides.

"Trust" in the context of crypto means only that the record is verifiable and each asset can only be transferred by someone with the right key. Which means that if someone takes your key and transfers your assets elsewhere, you can verify that the assets are no longer yours. Personally, I would not say I "trust" a bank that refused to reverse fraudulent charges, but the promise of crypto is that fraudulent charges *cannot* be reversed.

What is the cost of this immutability? Intentional inefficiency, meant to keep the cost of falsifying the record higher than the potential benefit. Of course, you wouldn't need recordkeeping to be inefficient if only known participants could modify the record. Permissioned blockchains exist, and while they are vastly more efficient than permissionless blockchains they usually have worse functionality than more traditional data structures and can't even claim to be "trustless" in the sense of Bitcoin, Ethereum, etc.

The only unique value of permissionless crypto as a recordkeeping system is that it has no guardrails. Crypto lets you complete irreversible transactions even when the institutions that would otherwise control your transactions would void or reverse those transactions. In other words, it is useful for breaking regulatory rules and committing crime. That could be good (though imperfect) if you are a citizen of an oppressive regime, but it's less good for all other use cases. It will always be worse than a conventional recordkeeping system for permissible transactions because it has no means of correcting errors and is intentionally inefficient.

And while Matt's point about the relative usefulness of NFTs and jewelry is debatable, it isn't debatable that NFT implementations make even less sense than cryptocurrency. Cryptocurrencies are (usually) entirely self-contained. NFTs aim to tie an entry on a particular ledger to another thing. There is simply no scalable way to accomplish this goal without relying on information that is extrinsic to the ledger, at which point your token is entirely dependent on a centralized entity (possibly, several). So...just purchase your NFT directly from the relevant centralized entity and skip all the inefficiency and fees. Chainless NFTs make way more sense than Ethereum NFTs: https://smy20011.github.io/ChainlessNFT/

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Narrowly responding to only your points about non-reversibility: There are plenty of situations where can be desirable for legitimate transactions. If I'm selling something online, I trust a Venmo payment to hold up because they have a strong history of not reversing transactions. With other services, there's plenty of stories of fraud where the buyer appeals the transaction later and you're SOL having already delivered the physical good. Of course as a buyer, you want the reverse of all of these protections...

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Sure, avoiding fraudulent chargebacks is just as important as avoiding fraudulent charges! That’s why it’s important to have a robust and trustworthy intermediary who can reliably resolve disputes and edge cases, or can at least be compelled by the force of our legal institutions. I’m just saying that I can’t think of a situation where the best solution for adjudicating disputes over transactions is to make all transactions indisputable.

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Saving Lincoln seems logistically easier than stopping Princip. You already speak English. As a long time DC resident, you even know where the theater is! (Although I think it has since remodeled.) The knock on effects of delaying WWI seem unknowable: maybe pressure builds up more and a world war begins anyway, but now atomic weapons are held by both sides. The effects of saving Lincoln, while unknown, are generally thought to be good: better Reconstruction, hopefully less or no Jim Crow…

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May 13, 2022·edited May 13, 2022

Saving Lincoln would have been great and prevented the disastrous Johnson presidency, but Reconstruction was going to be doomed sometime in the 1870s no matter what. The Democrats flipped over 90 House seats in the 1874 midterms for reasons that had very little to do with Reconstruction and much more to do with the global ecomony and Grant's feckless response to the crash of 1873.

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Runner-up idea: save Bobby Kennedy so that he becomes president.

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Kennedy would have lost the nomination anyway, but maybe he corrals a few more lefties into doing more constructive stuff to help Humphrey who wins.

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Would he? I was under the impression that Kennedy was super popular right before he was assassinated.

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He wasn't out of it, but he would have had to have some big break going his way (like surviving an assassination attempt?).

https://news.gallup.com/vault/235283/gallup-vault-look-back-robert-kennedy.aspx

"In Gallup's final poll on Kennedy -- which preceded his victory in the California Democratic primary two days before his death -- Kennedy trailed Humphrey, 36% to 48% (in a two-way race), in Democrats' preferences for their party's nomination. He was tied with Nixon in a trial-heat ballot of U.S. voters for the November election."

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The main thing is that the primaries didn't really determine the nominee in 1968. They were part of the equation, but it was a hybrid system that combined primaries with the old "smoke filled room" stuff, and Humphrey had the latter part locked up. Primaries didn't become the whole ballgame until 1972.

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Bloody Dem consultants making me change all my pro choice signs to pro decision ones

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To me, the push to abandon the time-tested “pro choice” language is more proof that many activists are not focused on outcomes. Instead, I think this is another example of intra-elite competition within a group as described by the Iron Law of Institutions. [1]

> The people who control institutions care first and foremost about their power within the institution rather than the power of the institution itself. Thus, they would rather the institution "fail" while they remain in power within the institution than for the institution to "succeed" if that requires them to lose power within the institution.

The activists pushing for the language changes appear to be more interested in advancing their own status within the progressive wing rather than achieving progressive outcomes. They want to develop and own the most avant-garde language so that they can write and speak on the topic, and ultimately take on more leadership. To me it looks like pure and simple careerism.

[1] http://www.tinyrevolution.com/mt/archives/001705.html

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Yes. Winning elections would actually be bad for them. It would mean that 51% of the country agrees with them, which would in turn prove that they are not forward-thinking visionaries on the vanguard of society.

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In fairness, marriage equality advocates like Evan Wolfson did indeed close up shop after Obergefell. My theory is, that’s what all the smart strategic advocates did, which left the performative maximalists in the movement as the ones in charge.

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May 13, 2022·edited May 13, 2022

The way I remember it is that circa-2015, we had high-profile trans stories in the media (Caitlyn Jenner and Laverne Cox) bringing attention to transgender people and their issues for the first time (like what had happened with Ellen and gay rights) around the same time as the Obergefell decision, which helped the trans activists who were working on local initiatives in blue cities, like in Charlotte, NC.

Then state GOP governments went on the offensive with bathroom bills to overrule what those blue cities were doing, or to get out in front of any that hadn't yet, and that invited backlash and made national news. On the national level, Trump wins the 2016 election and then in 2017 rescinds a ton of Obama-era protections for trans people while also banning trans people from the military. Those events propelled trans rights to become the new culture war issue now that gay marriage had been settled.

But this is the SB comments section, so activists always have to be the villain and not the GOP being fascists.

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why not both

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It’s hard for me not to see the increasing socioeconomic status of the Democratic coalition as disincentivizing winning too. Lawyers who took Professor Warren’s class at Harvard are going to be able to live in Manhattan and have access to choice if Roe falls, and they aren’t going to lose their healthcare if a filibuster-proof GOP majority repeals the ACA. So politics is more valuable to them as an expression of their values than for any actual policy relevance, even if prioritizing their values makes it more likely that they lose. It’s no coincidence that Black voters are the most pragmatic and moderate Democratic voters as well as the ones who have the most to lose if the other team wins.

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The Mailbag question of mine that MY didn't want to answer is basically premised on this assumption.

Post-scarcity politics, baby.

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Term limits for all stakeholders?

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We need to replace the class, in both media and journalism, that takes Twitter too seriously, even if it means more Eric Adams’.

I wish the people who care passionately about Elon Musk taking over Twitter could have a moment of clarity that helps them understand how ridiculous they look to sane people.

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I see no sign that the purpose of these organizations is or ever will evolve to be "develop coherent, reality-based theories of political change..."

Obviously term limits of any kind won't work.

But we need to find some way to destroy most of these advocacy groups or nothing will ever get better as long as educational polarization drives the electorate's behavior.

I keep coming back to "tax the wealthy so ruinously that they feel they don't have the money to donate to any of these prestige projects and still afford their lifestyles."

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I think more politicians just need to get it into their heads that deep down in their psyches, these activists don't actually want you to do what they say all the time. Like teenagers, a part of them yearns to be told "no" so they can be indignant about it and tell their friends that no one ever listens to them because they're too smart. Picking fights with them is a win/win for everyone! The activists get the dopamine rush they crave, and the politicians do better with swing voters in elections. It's like symbiosis.

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Lol.

That's a hopeful case, but it has an actual causal mechanism that makes sense, so maybe it will happen.

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You're more optimistic than I am.

I don't think there's any mechanism for "rewarding them". They'll be entirely in charge of the party's internal workings before we could possibly chop them off at the knees.

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OTOH, maybe MAGA Republicans will become pro-choice to own the libs.

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Honestly outside of this incredibly stupid context, “pro decision” on abortion to me just sounds like someone supports the upcoming Supreme Court decision

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Pro Decision is being in favor of Lebrons decision show when he went to Miami

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I can see the ad now "don't be like Pat Riley, LeBron and the rest of the pro-decision elites that everyone hates. Vote Republican"

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Risks losing votes in Florida, but that state is so far gone it’s probably still safe. I think this could work!

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If Ray Allen’s Boston teammates can forgive him for going to Miami, I think the rest of us can let Lebron off the hook for The Decision. It *did* produce several classic Finals matchups. Mark me down as pro-Decision.

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Bwah!

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I was hoping the impending fall of Roe would splash some metaphorical cold water in the faces of the pro-choice? movement, but that doesn't seem to be happening yet. (is it 'pro-abortion' now? I'm old enough to remember when saying 'pro-abortion' was a major faux pax.....and I'm under 40...but I digress). It seems they're more concerned with trying to craft just the oh so perfect message that will convince the masses of America that abortion is an unfettered good and there should be no misgivings about it whatsoever. I just don't think it works that way, they are going to need the support of people who have some misgivings about abortion, but don't want it to be either outright banned, or so heavily restricted it might as well be banned. What was so wrong about 'safe legal and rare'? The 'rare' was aspirational and meant nothing in policy terms (except for maybe better access to sex ed and birth control, which I think everyone on Team Roe also supports), it just created some space for people with misgivings to not feel completely alienated.

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Even if you’re pro choice, a lot of situations where people have abortions are not actually good - like we should not be happy that having a child while poor is as bad as it is in the US. Not to mention the many sad situations (possibly even life of the mother) where Southern and Midwestern Republicans are going to try to ban it in the coming years - even mostly pro life people are going to be horrified by some of the stories that will come out, and will be willing to acknowledge that at least rare situations justify abortion.

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On Schumer, I think the important thing to understand is that he probably isn't consciously dwelling on the idea that "we can throw away concrete wins as a party as long as no one's mad at me." Instead, what's happening is that Schumer's from Brooklyn. He's surrounded by progressives 24/7. He's also in rarified air as a caucus leader. He talks to the upper echelon of Democratic donors and interest groups every day, and the donors as Matt has pointed out in the past are way to the left of even rank-and-file Dem voters. That probably skews his sense of what's popular in an unconscious way.

It wasn't like that in 2007, and certainly not in 1999 when Schumer first joined the Senate. New York has always been a liberal state, but not nearly as uniformly then as it is now. Before Schumer beat D'Amato, New York had a Republican Senator and Governor *and* NYC had a Republican Mayor *and* the one Democratic Senator was Pat Moynihan. As everyone knows the country has gotten more and more regionally polarized in recent years and Schumer's behavior and mentality are products of that. It's not so much that he's "forgotten" the Baileys, as that there are mathematically way fewer Baileys around him now than there used to be. The same thing has probably happened to Kamala Harris, who ran normie-friendly campaigns when she was first running for DA in the '00s.

That obviously doesn't let them off the hook: it's their responsibility to look at objective data and consciously overrule their gut feelings on what the voters want. But that, I suspect, is what's happening with them psychologically. Senators from less-deep-blue states really need to get in Schumer's ear and tell him that he's steering them into a ditch. I was heartened to see Tim Kaine push back a little bit on the idiotic abortion strategy this week (https://twitter.com/JHWeissmann/status/1524561503977881602) but we need more of that.

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On the subject of Tim Kaine it's been fascinating to see the lefty Twitter mob insist that he's pro-life.

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Oh, has that been happening? I hadn't seen it yet, lol. Well he should welcome it. He isn't going to lose a primary in Virginia - it isn't far enough to the left - and it'll only help him in the general election. Same logic holds for the majority of the Senate Dem caucus.

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I have a question not necessarily for Matt: are there any prominent working class people in the Democratic party? I can't think of any. I thought maybe AOC but it turns out she's an architect's daughter who interned for Senator Kennedy in college.

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author

Joe Biden — first in his family to go to college!

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If the best Democrats have in terms of working class representation is a guy who entered politics in 1972 and whose only job outside politics was practicing law, I think that rather proves the point.

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May 13, 2022·edited May 13, 2022

Jon Tester was a music teacher and a farmer before he got into politics. So it's not like the Dems have *zero* folks with a working class background.

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May 13, 2022·edited May 13, 2022

This also indicates Dems would benefit from more working class representation:

- Tester is one of the top performers in either party electorally

- Tester has close to 0 influence on the party at a national level

Need more Testers!

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It's a real issue, honestly. I'm pretty liberal by all accounts, but I look at national-level Democratic politicians and I see very few that seem like they ever had any other career trajectory aside from "aspiring politician".

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Thinking out loud: is this a byproduct of how large constituencies have gotten? Wikipedia tells me that the average congressional district was 33,000 citizens in 1790, compared to about 700,000 today. Or even 200,000 around 1900.

https://en.wikipedia.org/wiki/United_States_congressional_apportionment

I, me, Regular Guy, can vaguely imagine trying to represent the interests of a smallish town. I might do it for a few cycles, maybe not even quitting my day job, and then let somebody else do it. An enhanced view of a civic duty.

I cannot *imagine* trying to represent 700,000 people. It would need to feel like a calling, a vocation. How can you get a regular person to want to do that?

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I'm sure Conor Lamb has an old notebook from high school that's filled with pictures where he's pasted his face on Kennedy's body. Stop recruiting resume polishers, Dems!

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Agreed. And its not like Democrats have no options left on this front. They could always start trying to source working class candidates from the unions that they're so tied-up with.

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Tim Kaine's dad was a welder.

Bob Menendez (lol) dad was a carpenter.

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Schumer's dad was an exterminator!

Joe Manchin's dad was a small business owner (had a carpet store) but it was in a small coal-mining town. Raphael Warnock's dad was also a small business owner but it was a junk car business. Do those count?

Alex Padilla's dad was a cook, I think.

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Are teacher's working-class? I would generally not consider jobs where you need a college degree to be working-class.

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I have to say, as a poor/working class kid who used to do organizing work with liberals . . . the folks that you’d be surrounded by seem insufferable. I can’t imagine spending meaningful time around liberal activists today. Life’s too short.

The language and behavior policing, the litmus testing, that seems to go on is antithetical to effective organizing. Especially of the working class. They/we are often uncouth, and you’ll have to bring them along rather than performatively condemn them.

Are we willing to do that?

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I'm not even an AOC stan but you've framed her origins almost absurdly uncharitably lol. Her dad appears to have founded an *architectural and landscaping company* that had 6 employees, and when he died her mother became a bus driver.

Also as a DC-area rat I must insist that random-ass people with no connections get Senate internships where you answer the phones and do nothing else of value all the time.

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Per Wikipedia, she moved at 5 to a suburb with a current median family income of $138k. Maybe it's gentrified since then?... but it seems like architect dad did alright for himself. (He died when she was 19.)

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I just read her Wikipedia entry

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Her voter base in her primary upset was in Astoria Queens too - not exactly the working class

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Why does her dad's job matter in deciding if she's working class? I think politics jobs like member of congress or nonprofit executive are generally not considered working class so pretty much by definition nobody leading any party is working class. Nicholas Carnes is the main academic I know of who studies this sort of thing and he uses the jobs people had before they ran for office as the main measurement to study working class people in office.

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Are there any in the Republican party?

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Mitch McConnell's family ran a funeral home. Mike Pence's dad ran a group of gas stations. John Kasich's dad was a postal service worker. Kristi Noem is farmer. Marco Rubio's and Ted Cruz's parents immigrated/fled from Cuba.

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'Ran a group of gas stations' isn't even close to being working class!

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Then what is your definition of working class? Getting paid by the hour? Not sitting at a desk? An income threshold? I understand why Marxists think that gas station owners and plumbers are "capitalists," because they own capital. But in the US, gas station owners and plumbers certainly have a lot less culture power, political influence, and even less of a desire to work in politics than does the college-educated, professional-managerial class that doesn't own as much capital. And the importance of the "working class" category of people is that they do not have a lot of political power.

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Trying to create a comprehensive definition of the term 'working class' is a mug's game, but there's a definite 'you know it when you see it' quality to these things. If I 'run a string of gas stations', I own assets and property and presumably make a living from economic rents. If I want to take a day off and just not check in on my gas stations, I can go play golf with the lads at the country club.

And that final point is why I don't like this argument about 'cultural capital' either. I mean, sure, no-one's making sympathetic movies or writing sympathetic songs about guys who own a string of gas stations, but I presume that if you went to the country club or the golf course or the Rotary club or whatever local Indiana institution in the mid-1950s it would have been full of guys who looked and sounded like Mike Pence's dad.

His hardscrabble background hardly seems to have locked the family out of political power either, given not just one but two prominent political offspring.

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I think a reasonable/useful definition of working class needs to include a degree of economic precarity. Certainly more than a owner of a group of gas stations would face.

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Ted Cruz is working class? I don't get this definition

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Elizabeth Warren's daddy was a janitor, so do we count Harvard professors as working class?

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I guess do you mean "working class" as in the politician had a working class-type career before going into politics, or grew up in a working class household but went on to college and had a white collar career?

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Do either of these definitions have a bias towards either party when you look at "prominent" members?

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Ted Cruz maybe isn't the best example. His dad was a political asylee, but also got a degree from UT Austin and owned an oil seismology company.

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Martin van Buren? Andrew Johnson? I can’t think immediately of any others

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The reason why Schumer can get away with losing, even on an issue as big as abortion, is that American political parties are incredibly weak. The Democrats don’t punish leaders who lose, because they don’t care about winning as a team, just about winning reelection for themselves.

In strong parties, leaders who can’t pass winning bills get the boot, and members have an incentive to select effective leaders.

For the political science case in favor of strong parties, check out Responsible Parties, by Ian Shapiro and Frances Rosenbluth (both at Yale). You can also find some good Shapiro lectures on YouTube.

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We would probably have stronger parties if the government got out of the business of running partisan primary elections, and left it up to parties to govern their own internal affairs, including most notably the selection of party candidates.

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Abolishing primaries is obviously impossible, but there’s a reason no other country in the world selects political candidates in this way and it’s clearly bad for democracy (now if only we could get lefty “America is bad” exceptionalists to notice this and agitate for defunding primaries instead of the police...)

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May 13, 2022·edited May 13, 2022

That’s exactly the sort of thing S&R argue!

They also go over the history of primaries in the US, much of which is surprisingly recent. Did you know Estes Kefauver—an anti-crime populist—won most of the Democratic primaries in 1952, and the party nominated Adlai Stevensen anyway? Kefauver was seen by party leaders as a “maverick.”

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Thank you for highlighting a point I frequently make wherever I can. My view is that most of our current political dysfunction stems from weakening parties to be mere brands.

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Speaking of messaging bills that no chance of passing - what's up with Democrats in Congress introducing the "Price Gouging Prevention Act of 2022?"

Do Democrats feel like they have it to easy in the upcoming midterms so they need to gift attack add material for Republicans to run on Democrats supporting Venezuela style socialism?

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The DSA just sent a bunch of emissaries to Venezuela, so that line of attack is going to happen anyway no matter what the Democrats do.

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May 13, 2022·edited May 13, 2022

Well sure - but the argument is often that activists do all kinds of crazy stuff, but elected Democrats don't. If the elected Dem's do it too....

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I think Matt's techno-optimist priors are blinding him from seeing the obvious answer, which is that crypto is the dumbest thing humans have ever invented and everyone with a modicum of common sense called this outcome ages ago.

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founding

On the Fed bank accounts thing, there are definitely some tricky things to think through:

If you're actually going to take deposits (the Ricks proposal Matt linked to proposes this, but in theory you could have a Fed account where you can only spend money the government gives you like tax refunds or Social Security, etc.), then you're going to need to do some Know Your Client/Anti Money Laundering (KYC/AML) work. Banks are required to make sure their clients aren't using their accounts to facilitate illegal activity (e.g. selling illegal drugs and just depositing the cash in the bank). They're supposed to look into the source of funds; for most of us, this is just a direct deposit from a company (and the company's bank is supposed to be doing KYC/AML on *it*) so this is straightforward. For anyone doing cash business, it's not. Ask someone who deals with small retail or cash payments as a small business owner sometime - the bank does an annoying level of investigation into their activity. I think this is an issue that the Fed could solve, but there's every reason to be worried that the government wouldn't be good at clamping down on illegal activity.

The trickier side is actually what to do with the money. I think Prof. Ricks is implicitly assuming that the Fed would just store the deposits there, but this would be challenging. The Fed would effectively be acting as a "narrow bank", and the Fed has actually banned banks from doing this. Their concerns are basically that by taking customer deposits and parking them at the Fed, narrow banks would drain liquidity from the system (the equivalent of hiking interest rates), forcing the Fed itself to inject more liquidity in by buying bonds or lending to banks (basically restoring the deposits to commercial banks that the narrow bank took away). However, this makes banks long-term dependent on Fed funding, and they don't want that.

You could also have the Fed act like a normal bank and lend money. Here though, there's definitely history of government-controlled banks directing lending inefficiently (and expensively!) for political purposes. The German Landesbank system is a good example here.

To wrap all this up with a constructive suggestion: what do you (everyone! not just Matt) think about the UK's shall-issue checking account system? My understanding is that they require banks to issue no-fee basic checking to everyone - wouldn't that be easier and simpler than expanding the Fed into a consumer-facing bank?

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Great comment. I sometimes get tired of the "here's my brilliant thought; I leave the petty details of fleshing it out and implementing it at societal scale to lesser minds" approach.

There's a whole big bunch of devils in the details of this one.

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Going back in time creates huge X risk. Surviving the Cold War was extremely lucky considering the downside and doing anything that forces history to rerun that time again is deeply irresponsible. The most important thing is to go back in time and get rich so you can donate to Time Travel Safety organizations.

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May 13, 2022·edited May 13, 2022

WWI would have still happened even if didn't start in July 1914. It was inevitable and would have started a few years later. But the course of the war would have been completely different. Like, if the war began in 1915, would the "The Gap" have opened at the Marne allowing the Brits to get behind the German lines, setting up trench warfare on the Western Front? If it held off until 1916 and Franz Joseph dies and Franz Ferdinand can't keep the empire united, would the war have been over who gets to control what was Austria-Hungary? If war holds off until 1917 or 1918, do the Russian or Ottoman empires collapse before war breaks out? Or does the Russian Army finally modernize and gets to Berlin before the Germans reach Paris?

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+1 re the likelihood of World War I (in some manner - not necessarily the identical configuration of participants) happening even in the absence of Franz Ferdinand's assassination. I personally found Matt's take in the Austro-Hungarian Empire thread about the likelihood of avoiding the war if Franz Ferdinand ducks assassination really bizarrely rosy -- the European great powers had been on a collision course for years and in many ways it was luck that a European-wide war hadn't started earlier. I remain extremely skeptical that a European-wide war could have been avoided much longer than 1916, perhaps 1917 or '18 at the absolute latest. (That said, anything that changes when WW I begins likely heavily impacts the probability of the Bolsheviks ending up running everything after the Russian Revolution.)

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Everything I know about Russia I learned from Mike Duncan. According to him, the Russians had a ~10 year plan to build a modern military after the disaster of 1905, but the 1914 crisis preempted the full completion of those plans. Had the war started after 1914, there was a real chance the Russian military could have come off much better. (So no Russian Revolution?)

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I mean, there was already a non-zero chance Russia could have ended WWI in the late summer or fall of 1914. They mobilized their army much faster than Germany anticipated. If generals Samsonov and Rennenkampf didn't hate each other and had some modicum of cooperation they potentially could have quickly defeated the eastern German forces. Instead they advanced seperately and were destroyed at Tannenberg and the Masurian Lakes.

I'm convinced that as long as Nicholas II was Tsar, a Russian revolution was going to happen, whether before, during, or after a European war. A WWI that started differently probably makes the Bolshevik revolution much less likely though (and therefore no USSR). A different WWI probably doesn't give the new government as many chances for dumb, delegitimizing mistakes, which was their downfall.

I like Mike Duncan too. Dan Carlin is also a good resource for WWI.

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Except that even if the AHE is more peaceable toward Serbia, you still have the Anglo-French vs. German antagonism -- Germany would remain a threat to British colonial ambitions and France would still want to recover Alsace-Lorraine. I don't see how there isn't a great power conflict of some sort before 1920 and once it breaks out, I don't see how it stays limited to just two or three participants given the web of alliances and the economic balance in Europe.

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I think it's entirely possible that if you bought Trump a few hookers for the period during the WHCD when Obama roasted him mercilessly, running for office never would have crossed his mind.

<3 you Barack, but in retrospect that was probably pretty harmful.

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founding

I miss Obama. But. His roasting of Trump during the WHCD and the mic drop during the mean tweets on Jimmy Kimmel are examples of his very annoying hubris. I'm convinced that without that public humiliation by Obama and "elite" DC society, Trump would have never run for the Presidency.

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The results from those specific actions were bad, but I can't totally fault Obama for not seeing it coming. Maybe one of Rumsfeld's unknown unknowns--as far as I can recall, Donald Trump was the first reality TV caricature ass-clown buffoon to ever run for president as a serious candidate, never mind the first winner.

Mr. Biden, please don't take deserved shits on.... um.... Paris Hilton?

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founding

He was the President of the United States, for God's sake. Going on Jimmy Kimmel to read "mean tweets" and using the WHCD to insult Donald Trump was undignified and insulting to our intelligence.

I repeat, though: I miss Obama's intelligence, his approach to governing, his attempts at bipartisanship (mostly in his first term). I would have liked him to be more like Margaret Thatcher when faced with the opportunity to be a celebrity: https://www.youtube.com/watch?v=QiMs165tVdw&t=2s&ab_channel=MongMalong

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It was dumb or very dumb. I wish he hadn't done it. I'm not sure how exactly to judge the effects of his bad choice.

I mostly loathe the WHCD from every angle, and I did before this unfortunate fork in history. We don't need a comedy hour! Just do your jobs!

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A goodly portion of the Latino swing is apparently down to two factors:

Democratic stupidity on the issue of laws, cops, crime, and everything around them, and the fact that Trump lucked ass-backwards into the first decent economic climate for ordinary workers, especially in urban and suburban areas, since the late 1990's.

He promptly and effectively claimed credit for it and had the instincts to go for the jugular on crime too.

Even then, if the Democrats hadn't let "Defund" get out of control, they'd still have done fairly well with Latinos in 2020 on the backs of Trump screwing up COVID except in the minds of the true believers.

If the economy had continued to stumble along as it did from 2011-15, then there'd really be basically no Latino swing at all.

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"Trump lucked ass-backwards into the first decent economic climate for ordinary workers, especially in urban and suburban areas, since the late 1990's."

While I'm loathed to give him credit for anything - especially something I don't actually think he cared about - I do think his pressure on the Fed to have an easy money policy and extravagant federal spending since he didn't care about deficits was a major factor in creating that economic climate.

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I say “lucked” because while I mostly agree, even that was luck, not planning.

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It would be interesting to know why you think the T-Mobile/Sprint merger was bad - I work in the industry and Sprint was circling the drain. Without the merger or someone like Elon Musk coming in and buying the company, Sprint was pretty much doomed.

And though it is still very early days, Dish - the new fourth carrier as part of the deal - is doing innovative stuff in its 5G network buildout. It’s ambitious and Dish might not succeed, but I think giving Dish the opportunity to compete as a requirement of the merger deal was a good regulatory move.

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This keeps coming up in liberal press and I am totally puzzled. The company's network quality is now amazing and it is now wiping the floor with Verizon and AT&T. They introduced new cheaper plans. They even introduced fixed broadband at a really low price that has scared the crap out of Comcast et al and led them to lower their prices. This seems pulled out of the Elizabeth Warren rant list and totally detached from reality.

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Matt made the same error that a lot of people seem to make when he answered the crypto question.

He answered with an explanation of why it might go up.

She actually asked, why should it exist at all.

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Q: Matt, do you recommend hiring a nanny?

A: hiring an ex-prisoner or recovering addict is a great idea!

I just thought this was unintentionally hilarious.

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"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"

The (non-Trumpy) argument at the time was that T-Mobile was simply not effective as a telecom carrier, and that it's better for competition to have 3 telco companies versus 2.5. Also, part of being a telco company is being granted a government monopoly on x amount of spectrum, and the argument was that T-Mobile was literally not using it. You don't use your government-granted monopoly on natural resources, they get revoked and given to a more effective market player instead.

As has been noted many many times, Instagram had literally no revenue and a small number of users when they were acquired by FB. There is literally no legal or antitrust standard known to man that would have prevented this acquisition. It's OK to invent new standards going forward ('if you're an x-sized tech company, you're not allowed to purchase a competitor in your domain, regardless of size'), but that simply didn't exist at the time

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About the Russia question I think a lot of people including me really underestimated the pent-up rage Europe had against Putin. Germany and the UK are mad he murdered people on the streets of their capital cities. Poland hates Russia even more than it hates gay people. Half of Eastern Europe’s leaders seem positively delighted at the opportunity to shovel lethal aid into Ukraine if it kills Russian soldiers. Europe seems to collectively have reached a “enough with this guy’s shit” moment and really taken Ukraine as an opportunity to stick it to him.

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RE Matt's time machine and "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."

Cmon, man - how about going back to the Ford Theater, thwarting John Wilkes Booth and boosting the likelihood of a successful Reconstruction? For starters, the location is a lock and everyone around speaks your lanuage.

Secondly, WWI had a certain inevitability about it; if it hadn't been triggered by that assassination it likely would have been something else, as multiple empires jockeyed for position. Of course, an embittered South keeping life miserable for now-free Blacks had a certain inevitability as well...

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