I spent much of this morning reviewing Mary Meeker's 2026 report on AI. I have some thoughts that I might put into a blog post. But the thing that really struck me is that the biggest reason I think capitalism holds so strongly to people is that it directly creates a scoreboard in terms of money. People like rankings, they trust them (regardless of if they are told that they should or shouldn't) because they value ordering and knowing hierarchy.
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"Is This a Stock Market Correction or a Bear Market?"
I don't think I had ever known the technical definitions of a pull back, a correction and a bear market. So this post delving into them and what the market appears to be doing right now was enlightening.
A pullback is a market drop of 5-10% and is very short term. It is a dip from a recent high during an ongoing bull market while upward momentum is still intact, and is a normal adjustment to a market cycle.
The market is in “correction phase” after a drop between 10-20% and can last a few months. These moves are typically met with higher volatility. Corrections can be violent as investors’ fear levels rise and panic selling may hit the market.
...
A bear market occurs after a drop of 20+% over at least a two-month time frame. In a bear market, investor confidence has been shattered and many investors will sell their stocks for fear of further losses. Trading activity tends to decrease as do dividend yields.
Bear markets tend to become vicious cycles when rallies are sold and not bought This happened in 2000 and 2007 and can typically be seen on charts as the market makes lower lows and lower highs. Bear markets tend to occur in the contraction phase of the business cycle and last, on average, approximately 16 months.
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"Why layoffs don’t work"
"All of a sudden," David Gelles, author of the Welch biography The Man Who Broke Capitalism, told NPR, "other CEOs saw that… if we rapidly wind down the cost of our labor, we could potentially see a meaningful increase in earnings per share for the next quarter and Wall Street sure liked that."
That ethos remains today. Data from the Bureau of Labor Statistics shows that 1.5m-2m Americans are typically laid off or discharged every month, a number that increases during recessions.
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"America is history’s most successful failing state"
Everything is so dark and awful. I overheard someone mention America as a failed state and did some searching, found this article which is normally behind Financial Times' paywall. Here's the archive available contents.
A key sign of a fading power is its currency losing value. Britain, like ancient Rome, could tell you a thing or two about that. By this yardstick America is close to an imperial peak. The euro is too fragmented, and China’s yuan too restricted, to threaten King Dollar’s primacy. Bitcoin is a pyramid scheme. Yet political science tells us that America is more divided than at any point since the eve of its civil war in the 1850s. Could it be defying the laws of historical gravity — a failing state that outshines its rivals?
The answer is yes, for the time being. A nation can be both rich and ungovernable for long periods. The last country anyone would compare to America is Belgium, which has been dubbed the richest “failed state” in the world. Yet US politics looks more like Belgium’s every day.
Unlike the US, Belgium is divided into language blocs, French and Flemish. Such is their mutual mistrust that most decisions are taken locally. Life goes on for months, even years, without a government. What saves Canada from a similar fate is that French-speaking Quebec is too small a part of it.
With one undisputed tongue, America should be free of such paralysis. Yet the cultural divide between blue and red state America is as uncomprehending as any language barrier.
The US separation of powers has gone from being a strength to a weakness. One branch, the US Supreme Court, is now a second legislature, making laws that would be the preserve of elected assemblies elsewhere. Supreme Court justices have life-long tenure and invoke long dead founding fathers to justify their lawmaking. The court is under red America’s control for decades to come. Its conservative majority may be taking revenge for the liberal Supreme Court of the 1960s and 1970s, which pioneered “legislating from the bench”. Either way, American law is no longer above politics. The court is now rated as low in opinion polls as other institutions.
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Tall vs. Wide Conservation in Economics
A shower thought this morning: I had a thought of how Piaget's Theory of Conservation (the psychology test about wide vs tall containers,) is very similar to the current state of capitalism.
I was thinking how the US economy shifted so dramatically during Reagonomics, moving from the broad distribution with money in the hands of individuals, to the focusing of wealth in the hands of corporations. During this the US economy has continued to add more money and wealth from the world, however rather than being more broadly distributed, it becomes heavily focused around the corporations and the chosen few.
But, because it has netted more wealth, it is heralded as a success.
Is this an actual parallel of the psychological concept? Considering it largely is referred to as a way of highlighting youth neurological development, probably not - but I have no idea and I found the similarities notable.
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Bernie shares his thoughts on the democratic loss
Bernie tweeted the following:
It should come as no great surprise that a Democratic Party which has abandoned working class people would find that the working class has abandoned them.
While the Democratic leadership defends the status quo, the American people are angry and want change.
And they're right.
Along with it, there is the following statement.
NEWS: Sanders Statement on the Results of the 2024 Presidential Election
November 6, 2024
BURLINGTON, Vt. Sen. Bernie Sanders (1-Vt.) today released the following statement in response to the outcome of the 2024 presidential election:
It should come as no great surprise that a Democratic Party which has abandoned working class people would find that the working class has abandoned them. First, it was the white working class, and now it is Latino and Black workers as well. While the Democratic leadership defends the status quo, the American people are angry and want change. And they're right.
Today, while the very rich are doing phenomenally well, 60% of Americans live paycheck to paycheck and we have more income and wealth inequality than ever before. Unbelievably, real, inflation-accounted-for weekly wages for the average American worker are actually lower now than they were 50 years ago.
Today, despite an explosion in technology and worker productivity, many young people will have a worse standard of living than their parents. And many of them worry that Artificial Intelligence and robotics will make a bad situation even worse.
Today, despite spending far more per capita than other countries, we remain the only wealthy nation not to guarantee health care to all as a human right and we pay, by far, the highest prices in the world for prescription drugs. We, alone among major countries, cannot even guarantee paid family and medical leave.
Today, despite strong opposition from a majority of Americans, we continue to spend billions funding the extremist Netanyahu government's all out war against the Palestinian people which has led to the horrific humanitarian disaster of mass malnutrition and the starvation of thousands of children.
Will the big money interests and well-paid consultants who control the Democratic Party learn any real lessons from this disastrous campaign? Will they understand the pain and political alienation that tens of millions of Americans are experiencing? Do they have any ideas as to how we can take on the increasingly powerful Oligarchy which has so much economic and political power? Probably not.
In the coming weeks and months those of us concerned about grassroots democracy and economic justice need to have some very serious political discussions.
Stay tuned.
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Slam Dunk
Pulled from this post on Bluesky.
But the real treasure is this picture in the replies, with poorly photoshopped John Maynard Keynes dunking on Robert Lucas.
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"Wait, are millennials suddenly the wealthiest generation?"
As one of the generation discussed in this article, it's interesting to see. I did manage to buy our home in Q3 of 2013 which, at the time, felt like we were late getting it as the prices then had begun to go up -- but obviously we had no idea how much they would continue to rise.
In the past, this once-every-three-years survey held discouraging news for millennials. After adjusting for inflation, their wealth lagged behind where their Gen X and boomer parents had been at the same age. But when we incorporated the latest survey, conducted in 2022, we were shocked to see millennials had taken the lead.
And home equity seems to have emerged as the wealth-creation hero. The eldest millennials — now in their early 40s, old enough to sue for age discrimination — boast about twice the median home equity a Gen Xer did at that age. They also enjoy a substantial lead over boomers.
For once, the unluckiest generation seems to have benefited from exceptionally lucky timing. From 2019 to 2022, home prices catapulted 41 percent, making it the best three-year period on record, according to the home-price prodigies at the Federal Housing Finance Agency.
As a note, huge kudos to the WaPo team, the chart here captured as an image, was interactive even in my RSS reader and a sign of how far the web technology has come.
This is an important clarification later in the article as they disentangle and discuss the fact that renters and those living with their parents don't have the same wealth boon:
So, when we say millennials have record wealth for their age, we’re really saying millennials who have become financially independent are doing well for their age.
I can say that yes, while on paper, I have "wealth" thanks to the house I'm paying off every month - I am far from rich. Wealth and money are not the same thing until you cross some mysterious barrier where you can borrow against it, and avoid taxes with it, etc.
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Inflation during the US Civil War
I am currently reading The Shortest History of Economics by Andrew Leigh. During its section about the Industrial Revolution, it touches on the industrialization of war by discussing the US Civil War. I found the below passage fascinating as the inflation during the war was not something I'd ever heard about before.
During the course of the Civil War, the South funded 60 percent of its costs through inflation (compared with 13 percent for the north). By the end of the war, the South was printing so much money that goods cost ninety-two times as much as they had done when the conflict began.
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Supreme Court will not hear challenge to Washington's Capital Gains tax
The U.S. Supreme Court said Tuesday it would not review Quinn v. Washington, the lawsuit challenging Washington’s capital gains tax.
The Legislature passed the tax in 2021 and payments first came due in April 2023. It’s a 7% tax on stocks, bonds and other investments or tangible assets above $250,000.
The tax brought in almost $900 million in revenue in its first year.
Opponents had argued it was a tax on income, and thus barred by Washington’s state constitution.
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What is the return on living healthy?
A very interesting write up looking at the return on investment for being healthy. Economics reading is not normally something I pursue for fun, it's very dry and impersonal. But I found this exercise interesting and can see how it might help some find the ongoing motivation for exercise.
At the minimum, they would insist on knowing when they get the extra year and the quality of the year. Let’s assume that the year is a high quality year. Suppose a hypothetical person, currently 50 years old, realistically expected he’d die in 2024. Let’s assume that he is otherwise physically and emotionally healthy. If he could, he would likely pay “a lot” for that extra year.
Now suppose everything else is the same, and the man had the same degree of expectation that he would die in 2054 (thirty years later). Almost certainly he would pay less today for that 31st year than he would for next year in the first example.
The willingness to pay more for receiving the good (the extra year) now versus later is an example of what economists call time preference. Time preference is a leading reason offered by most economists for the observation that in a free market interest rates are positive (or non-negative).
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Predicting 2024 Japan Megatrends
First, a necessary "fuck Substack" comment, given their stance on platforming Nazis.
With that out of the way, I think it's interesting to share this from the article about Japan's future for immigration:
4. Open-Door Japan
Japan will become an immigration powerhouse. Before the pandemic, the country was on track to accept about 150,000 new non-Japanese employees per year. This more than doubled to almost 350,000 in the first half of 2023. There are now approximately 3.2 million non-Japanese residents of Japan, up from barely half a million 30 years ago. Visa and permanent-residency requirements continue to ease. Most importantly, the biggest obstacle to employing non-Japanese talent—seniority-based rather than merit-based compensation—is beginning to change. All said, it is now perfectly reasonable to expect that about 10 percent of employees will be non-Japanese by 2030. That's more than double the current rate of just below four percent.
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In November, US Economy saw prices fall for the first time since April 2020
Will be curious to see if it is a trend or an aberration. If the prices resume moving upwards, it is a very bad sign.
After three-plus years of prices steadily — and sometimes sharply — increasing month after month after month, they fell in November.
[...]
November's Personal Consumption Expenditures price index, a comprehensive measure of prices US households pay for goods and services, declined 0.1% from the month before, bringing the annual inflation rate to 2.6%.
It's the first time the headline PCE index decreased on a monthly basis since the early stages of the Covid-19 pandemic. Annually, it's a marked improvement from a 2.9% rate in October and the 40-year high of 7.1% notched in June 2022.
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"Universal Basic Income: Short-Term Results from a Long-Term Experiment in Kenya"
From the conclusion of the linked study and its initial results from this large test. Bolding is my own.
This paper has described what we have learned two years in to a unique experiment designed to examine the effects of Universal Basic Incomes—here, a commitment to giving everyone in rural communities in Kenya income transfers sufficient to meet basic needs for over a decade. The design also lets us compare these effects to those of two shorter-term transfer programs which delivered similar amounts of money during the period we studied—as small monthly payments or in a single lump sum—but without the promise of ongoing funding. Communities that received long-term transfers saw substantial economic expansions. Over-all enterprise counts, revenues, costs, and net revenues increased by 14%, 41%, 35%, and 52%, respectively—substantial changes relative to the quantity of money transferred in, which amounted to 11% of control mean expenditure. This reflected structural shifts, with the expansion disproportionately concentrated in the non-agricultural sector, particularly in retail—indeed much of the economic story appears to have been the expansion of supply chains to meet increased local demand for goods manufactured elsewhere.
Labor supply did not fall—we estimate a small, insignificant increase, and can reject large decreases—but also did not rise by enough to account for much of this expansion. Instead the main pattern was one of changing occupational choices, with workers switching out of wage employment and into self-employment (and wages rises in response). Household well-being improved on some common measures (e.g. food consumption, depression) but not others (e.g. children’s anthropometrics and schooling).
Relative to these effects, those of the shorter-term transfers were striking. Communities that received lump sum transfers experienced economic expansions similar to and on some measures even larger than those that received long-term transfers, as well as significant population growth (13% more households). Yet communities that received the same amount of money structured as short-term monthly payments saw very different effects: aggregate output grew significantly less, while by some measures (e.g. consumption) short-run household well-being increased more. Collectively this pattern of effects implies that both the way in which a given quantum of transfers is structured and the promised future duration of transfers can have large consequences for behavior and outcomes today. It is consistent, for example, with a model in which borrowing and saving are difficult and investment projects require both a large up-front capital outlay and ongoing flow investment to turn a profit—though this is hardly an exclusive explanation.
The pattern of effects on mental health—specifically, depression—are also noteworthy. Depression scores fell in all arms, but more so in short-term and especially the long-term arm than in the lump sum arm, even though the lump-sum arm saw the largest economic response. Perhaps the lump sum recipients feel the weight of the future more heavily, knowing that they have made their bets and have no further cushion to anticipate if those do not pan out.
Time (and subsequent round of data collection) will shed some light on this point, letting us examine how these interventions are affecting the volatility as well as the average levels of living standards. It will also reveal whether more generally the trajectories of households in the long-term communities diverge from those in the others as they continue to receive transfers. The long horizon of their transfers may allow them to bide their time, waiting for the right opportunities to arrive. Or it may prove that the initial wealth transfer in the lump sum arm was sufficient to kickstart those communities onto permanently better trajectories at much lower cost than the long-term approach.
In the meantime we conclude with three remarks relevant to the broader dialogue about UBI. First, UBI here did not lead to the adverse effects that some of its critics have argued it would. Most notably, people did not work or earn less on their own. This is in line with and extends the partial-equilibrium evidence from other shorter-term and more finely-targeted transfer programs in low- and middle-income countries (Banerjee et al., 2017). Second, while there is much to learn from the many short-term pilots now underway around the world, one should be cautious extrapolating from these to forecast the consequences of longer-term policies. Households here made their plans with the future in mind, and those in the long-term arm experienced very different outcomes—whether because they could borrow against or plan to spend their own future transfers, or plan to win future business from their neighbors. And third, tranching matters. Discussions about UBI usually begin from a narrative of meeting basic needs. But even the most destitute households often look for ways to accumulate sums of money large enough to make larger, lumpier purchases (Collins et al., 2009). Designing UBI schemes in ways that respond to this need could make them a more compelling strategy for addressing extreme poverty over time.
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Japan to make university free for families with three or more children starting in 2025
I saw this mentioned on Mastodon and so I went to find a related article for more information:
In a significant policy shift to tackle Japan's severe decline in birth rates, the Japanese government is planning to offer free college tuition to families with three or more children starting the 2025 academic year. This move is a part of the broader "Children's Future Strategy," which Prime Minister Fumio Kishida discussed in a recent press conference. This policy and the broader strategy is set for a Cabinet decision later this month.
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Washington state has highest gas prices in country
Experts say Washington's price surge is linked to the state's latest, most-ambitious efforts to battle climate change, specifically the new carbon-pricing program launched this year that charges businesses for the greenhouse gases they emit. The first two quarterly auctions of emission allowances raked in more than $850 million.
Now oil companies are choosing to pass on the compliance fees, the experts say. Those costs add up to about 50 cents per gallon for the consumer, according to the Oil Price Information Service, a Dow Jones company that collects fuel-pricing information for many clients, including AAA. The state Department of Ecology, which oversees the carbon-pricing program, says it's aware of oil companies passing on the costs but has no power to stop it.
And here-in lies the rub. When the businesses are not things people can easily opt out of, they are rife for this sort of exploitation.
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Guilt Tipping is everywhere and it's a problem
When I see some of the absurd places I'm asked to tip, I shake my head. I hate it about the US, and I hope it goes away sooner rather than later.
I found myself having to develop my own mental heuristic for how and when I will tip, it basically boils down to this:
- Am I at a food service business where I was personally served by someone? (If possible, inquire if digital tips are distributed fairly.) If yes, tip 20%. If no, continue
- Am I at a service business where I received good service? (If possible, inquire if digital tips are distributed fairly.) If yes, tip moderately. If no, do not tip.
When it comes to DoorDash or other delivery drivers, I opt for a smaller tip. Lower than the 15-20%+ usually unless there is something unusual about the order. Truth is I very rarely utilize these folks except for pizza still.
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"Inflation in G20 Countries"
The Worst (> 9%)
- Argentina 109%
- Turkey 43.7%
The Kinda Bad (6-8.9%)
- United Kingdom 8.7%
- Italy 8.2%
- Germany 7.2%
- Australia 7%
- Euro Area 7%
- South Africa 6.8%
- Mexico 6.3%
The Middle (4-5.9%)
- France 5.9%
- Singapore 5.7%
- Netherlands 5.2%
- United States 4.9%
- India 4.7%
- Canada 4.4%
- Indonesia 4.3%
- Brazil 4.2%
- Spain 4.1%
The Best (1-3.9%)
- South Korea 3.7%
- Japan 3.5%
- Saudi Arabia 2.7%
- Switzerland 2.6%
- Russia 2.3%
The Liar
- China 0.1%
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Why Gen-Z and Millenials might be seen as Entitled
This post looks at the perception of "entitlement" among Millenials and Gen-Z. The author, Ted Lamade highlights the fact that for the past 15ish years, the economy has been very solid and mass layoffs haven't happened. This, he says, is part of the reason the young generations (myself included, sort of) have (as you'll read) a high confidence in their ability and bargaining power.
Now, I will note, as an "elder millenial" I worked (and was laid off) during the great recession. So, I am aware of what it can mean. However, I do take Lamade's point that this might be part of why older works perceive younger ones as "entitled." Not something I had considered before.
While it's a bit harsh to label these generations "entitled", they do have something in common that can give off this impression. Something that binds them. Something that explains the heated responses in the bar — given the strength of the U.S. economy over the past decade-and-a-half, these two generations have yet to experience or witness sustained professional loss (Covid was clearly traumatic, but the recovery was swift given the degree of fiscal and monetary support).
This means that the youngest part of the U.S. workforce hasn't experienced large scale layoffs, seen what effective leadership amidst a pronounced economic downturn looks like, witnessed strong mentorship during these moments, watched teams rally together, and ultimately seen the impact these experiences can have on their careers. The work-from-home phenomenon has only exacerbated this phenomenon.
The result?
This sustained economic expansion has created two generations that are more confident in their own ability and bargaining position than any in quite a while.
Yet, change might be afoot. If this current economic slowdown persists (especially in the tech world), I expect to see some significant changes in the coming months and quarters, with one of the first being a migration back into the office.
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$26 TRILLION of new wealth created since start of pandemic went to richest 1% Oxfam report reveals
But yes, tell us how taxing the rich will destroy the world.
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"The Spaceballs Argument for Unconditional Basic Income"
An entertaining and very good read.
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Why our economy favors ultra wealthy existing
A fantastic write up with awesome interactive elements that delves into the Yard-sale model. I especially like the visualization midway through which explores the impact of wealth redistribution's impact on the system.
Interestingly, there isn't a good Wikipedia entry for it. But there are some good additional reference sources at the end of the linked article.
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Delving into the math of subsidies and how they can't / shouldn't be used as a tool to change eating habits
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8 in 10 young adults in the US live within 100 miles of where they grew up
Some interesting insights in this article. Also in the full study, which I've only skimmed currently. I wouldn't have put the percentage that stayed home that high, probably over 50%, but I think the fact I moved so far from home and also that both places I most consider home when growing up (Orlando and Seattle), have huge influxes of people sways my perspective.
Nearly six in 10 young adults live within 10 miles of where they grew up, and eight in 10 live within 100 miles, according to a new study by researchers at the U.S. Census Bureau and Harvard University.
Even the prospect of higher earnings in more distant locations does little to change these patterns.
The final dataset draws upon anonymized decennial census, survey and tax data for people born from 1984 to 1992, to measure migration between locations in childhood and young adulthood. Childhood locations are measured at age 16 and locations in young adulthood are measured at age 26.
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