Thanks for reading this third edition of my newsletter–now and forevermore graced with a topical numerical title. If you think a friend would enjoy it, please forward or share the link. Thanks!
1. I enjoyed Ezra Klein’s conversation with Molly Ball, which he called the best conversation he’s had about the election. Their discussion of Trump was especially good as it synthesized a few compelling angles on why he has been so successful. Purely descriptively, I think it’s correct to say that he is succeeding at what Pat Buchanan tried to do, which is shift the Republican Party from a conservative party to a white ethno-nationalist party. He understands (I use that word loosely and hesitate to assign much intentionality) better than most politicians that you only need 51% to win, so he picks issue that appeal very strongly to some people rather than trying to please most people. And as Ezra said in his most insightful comment, not all economic issues demand a zero-sum frame, but Trump has managed to pick out the economic issues where people’s perception of zero-sum is the strongest. Immigration, trade; issues where you can argue there are winners and losers. I would add that this is the way to move beyond the debate of “is Trump’s support about racism or economic anxiety?” By picking economic issues that lend themselves to the zero-sum frame, Trump has constructed a conduit between people’s frustration about stagnant median incomes and their willingness to blame the Other. It’s hard to blame Mexicans or Muslims for technological change, for example.
And this is really troubling. The first worst thing about Trump’s campaign is that it has fanned the flames of ethnic resentment and fragmentation. But the second worst thing might be that it has encouraged people to view economic problems and solutions in these zero-sum terms. The most important thing in the long run is economic growth, which can and should be broadly shared. Our politics should be focused on growth, and we may need growth to save our politics. From the very interesting New Yorker profile of Sam Altman: “Democracy only works in a growing economy. Without a return to economic growth, the democratic experiment will fail.” I’m not sure if I agree with his next conclusion that Y Combinator is “hugely important to that growth.” But it’s more important than anything Trump would have us talk about.
2. Ok, just one more thing about Trump. One thing has stuck with me from the story about his $916 million net operating loss and subsequent exemption from 18 years of taxes. I don’t see anything here about Trump behaving particularly badly, or at least not surprisingly (though we do get more evidence that he is a terrible businessman). But something about the tax rules involved seems unfair (the horror!). I don’t know much about tax law, so the following could be off base; please tell me if you know better. The “net operating loss” rule in question lets you claim losses suffered by your business–even if it’s an LLC–on your personal tax return so to offset your future taxable income by the same amount. Business money is the same as personal money, right? Except it’s not, since the risks of business bankruptcy are less severe than the risks of personal bankruptcy. If your business is an LLC, you can declare bankruptcy and not pay your debts; not true for personal bankruptcy, at least for several classes of debt like student loan debt and income tax debt. So the net operating loss rule creates an incentive to take risks in business: the worst that can happen is you declare bankruptcy and won’t have to pay taxes on future income until you’ve cancelled out that loss. This seems like moral hazard funded by your fellow taxpayers. What am I missing?
3. Excellent Washington Post multimedia feature on cobalt mining in the Congo. You have to watch the camera phone footage of a miner descending into a narrow 100-foot deep shaft with no safety equipment. Over the course of the supply chain, cobalt moves from independent, small-scale Congolese miners to a large Chinese cobalt processor to cathode manufactures to lithium ion battery manufacturers to Apple to me, currently typing on a laptop with 25% battery life. Apparently Apple is pretty good at verifying that “conflict minerals” don’t go into its products…but cobalt isn’t technically a conflict mineral. It’s just a metal mined under really unsafe circumstances. Thanks to this reporting, I wouldn’t be surprised if Apple exerts some pressure on its suppliers to buy from industrial cobalt mines rather than guys digging in their backyards. But from those guys’ perspective, that would only be a good thing if they could find some alternative work. A job in an industrial cobalt mine might be a step up, although those mines use fewer workers per unit of output than “artisanal” mines. I’ve read some things about development pathways recently, but the story often starts with manufacturing. What does the path from resource extraction to broader development look like? Reading recommendations welcome.
4. Our very own Jordan Schneider interviewed Venkatesh Rao for FiveBooks. Rao is one of my very favorite bloggers; his blog ribbonfarm is hard to summarize but I would say he is a much better sociologist of management and organizations than any of us who formally work in that field. In the interview with Jordan, Rao recommends five books; two of which I’ve read, one which I am currently reading, and two I will obviously add to my list. The unifying theme of his recommendations was “how the world works,” and on that point he said something that resonated incredibly strongly with me. He distinguishes between ‘appreciative’ and ‘manipulative’ models of reality:
An appreciative model is simply a satisfying understanding of the world. It may not necessarily allow you to do things—it may not allow you to build big companies or solve important problems like climate change—but it will give you an understanding of the world that satisfies you. That satisfaction, to people who seek knowledge, is very similar to the satisfaction that religious people get from having a religious idea in their head.
Thats the kind of satisfaction I reliably get from reading Rao, and it’s what I’m seeking all the time. I also liked his comments about studying history as a generalist:
Most of us, when we are first exposed to history in high school, learn an extremely dull, non-analytical version of history which is just one damned fact after another. It’s very unsatisfying.
Once you re-engage with history as an adult—and by this I mean intellectually aware, curious people not professional historians—there are very few treatments of all of history that truly satisfy your urge to understand just how human society functions and how it came to function the way it does. What are the variety of ways in which it functions around the world? How is the system in China different from the system in the United States. How did they each get to be where they are? All of these are questions that you could call analytical history.
In this model the (usually) narrower work of academic historians remains essential: they provide the basic building blocks of analytical histories. I’m sure some academic historians would be uncomfortable with this division of labor; a big macro book like Fukuyama’s Origins of Political Order will always be criticized for misrepresenting the many small episodes from which it is composed. But I think the solution to that is just more macro histories to correct one another and fight over the really important big questions of how we got where we are.
5. In America, lots of sushi restaurants are owned and operated by Chinese immigrants. Why? Because people are willing to pay more for Japanese food than Chinese food. “If I could be selling egg rolls for $3 each or cucumber rolls for $5 each, why am I not in that business?” And incomes in Japan are high enough that it only makes sense for a chef to emigrate to work in a high-end restaurant; for no-frills sushi places across the country, enter the Chinese. I, for one, am eagerly awaiting the day when Chinese restaurants also move upmarket.
6. This is from last week, but one for the history books: Obama exit interview with Doris Kearns Goodwin. My favorite part was Obama’s comments on ambition, riffing on the Lincoln quote “Every man is said to have his peculiar ambition.” He said that when you’re young, everyone has a general, undifferentiated ambition: “you want to prove yourself” in some vague sense. But then:
I think that at a certain stage those early ambitions burn away, partly because you achieve something, you get something done, you get some notoriety. And then the particularities of who you are and what your deepest commitments are begin expressing themselves. You’re not just chasing the idea of “me” being important, but you, rather, are chasing a particular passion.
Yes. Ambition is cheap. Peculiar ambition is what changes the world. I also found Obama’s comments on his optimism inspiring. I take it to be genuine; it’s what lifts him above the fray of political intransigence and allows him to focus on the long run where a certain arc of the universe is said to bend.