On the Horns

Since I'm mostly avoiding Twitter, I've been spared the idiotic "Democrats suck" messaging that I'm sure the left is blaring as Democrats fail to obtain their goals on immigration. The key point here is that the Republicans have the power. The only way to prevent bad things from happening is to vote them out of office and elect Democrats.

The Republicans have majorities in both houses of Congress and they have the White House. This means that they don't have to bring any bill to the floor they don't want to. (This isn't strictly true, but it's close enough for our purposes.)

This in turn means that Democrats can't get the vote they want. They will only get the vote that Republicans offer them. It doesn't matter that the Democrats would win a clean vote on DACA, probably overwhelmingly, because that's not on offer. The Republican leadership gets to decide the terms on which the vote will be held.

Now the Democrats do have one advantage, which is that their position is very popular with the public. If DACA ends permanently, and ICE starts deporting its participants, it will not be great for Republicans.

But the Democrats can't bargain very hard, because they are under intense pressure not to let this happen. So Republicans threaten to deport all the Dreamers, the Dreamers (understandably) flip their shit, and the Democrats cave. It's a sickening dynamic, but not one that the Democrats can do much about. (This all changes if the Democrats take one or both houses of Congress. At that point, they control the agenda and can hold whatever vote they want. That's why Trump was in such a rush to get rid of DACA and force the Democrats to destroy themselves before the 2018 elections.)

I am getting worried that the Republicans saved up their best wedge issues for 2018, after spending 2017 fucking around with unpopular stuff like Obamacare repeal. In other words, they are turning to advantageous ground in time to get everyone pissed at the Democrats ahead of the 2018 elections. If the Republicans are lucky, they will pick up supermajorities in both houses and they will repeal Obamacare and impose immigration reform on their own terms.

This is the light in which you should view far-left Democrat-shaming.

The Best of Your Light

A quick note about Senator Flake. When he announced he wasn't running for reelection, some pundits observed that he probably wouldn't have won his primary anyway. He is weak, unlike Susan Collins or Lisa Murkowski, because he has no constituency for his deviations from Trumpism. This observation was often delivered in a sort of scolding manner. Here is Josh Barro making the basic argument.

Now there are plenty of bad things to say about Flake, most notably that he has not in fact leveraged his political power to constrain Trump in the manner you would expect from such an ardent Trump critic. But fundamentally Flake's problem is that he doesn't live in Alaska or Maine. Scolding him for lacking a political base feels like scolding Poland or Norway for lacking an army that could stop Hitler. "Look at Britain! It didn't surrender!" would be a pretty obnoxious thing to say. Britain didn't surrender because it had a real navy and an effective air force, and a channel between it and the continent. I shudder to think what would have happened if the Wehrmacht had a land crossing.

I say all this because Flake's speech today was pretty good:



Flake lacks Gladstone's political skill and even more so his stomach for a fight, but his moral vision is Gladstonian, and I admire it.

Welcome to the Shithole

Imagine Donald Trump has proposed a big new foreign aid proposal to be focused on Haiti and other poor countries in the Caribbean. And imagine that while speaking informally with legislators, Trump says something like this: "Look, these people come here in large numbers, but it's not because they particularly want to live here. It's because their countries are shitholes with no good jobs. We should try to bring them up to decent living standards so they don't have to choose between leaving their families to work here and letting their families starve."

You could quibble with this, of course, and it would certainly be a diplomatic incident, but the sentiment itself would be basically decent. If you were to argue against it, you would argue that it is pretextual, that in fact Trump has baser motives. You would not say that a wish to improve "shitholes," if expressed in good faith, is somehow racist.

Of course that's not what he said. In fact he questioned why the U.S. should accept immigrants from "shithole" countries and expressed a preference for Norwegians. And:

Sources tell @kasie and me that in addition to Pres Trump’s ‘shithole’ comment, he also said “Why do we need more Haitians, take them out.”

— Frank Thorp V (@frankthorp) January 12, 2018

The New York Times reported basically the same thing in its piece.

Anyway I bring all this up because the word "shithole" is a bit of a distraction. The problem is not that he labelled Haiti a shithole (it is a shithole!), it's that he clearly thinks Haitians are inferior as a people, and he wants to exclude them from the U.S. on that basis.

This actually matters less than it first appears, though. I think a lot of people intuitively understand that the remark was racist, and even if they focus on the word "shithole," they are not actually outraged about profanity.

That said, because people always amplify the most entertaining part of the story, it does leave an opening for the anti-anti-Trump left to jump in with idiotic garbage like this:

“shithole” is definitely a term I’ve heard elites use to describe socioeconomically dilapidated areas of the United States

— Michael Tracey (@mtracey) January 12, 2018

Right, right, calling Alabama a shithole is just like wanting to exclude Haitians from the country while welcoming Nordics. Tracey is enough of a moron that I suppose I shouldn't get worked up, but he's parroting the party line that much smarter people will also adhere to. It is maddening.

[UPDATE: I am not good at quantifying these things, but a lot of people on Twitter, both on the anti-anti-Trump left and throughout the right, are taking the Michael Tracey line. So I think it's important to draw the distinction I outlined above. Otherwise it will be yet another idiotic exercise in missing the point. Sigh.]

[FURTHER UPDATE: The legitimate reason you might criticize the "shithole" phrasing is that it is disrespectful, and the President's job is to convey respect to our friends and allies around the world. This is a serious point, and in any other administration it would be a telling one. But of course, this is Trump, and disrespecting our allies is something he does casually for fun.]

Accidental and Inevitable

A prediction I feel confident about is that when Trump crosses the line in some horrible way, everyone will recognize that the die was cast long before, and that our failure to nip it in the bud will seem very obvious in retrospect. For instance, if the DOJ were to bring charges against Clinton or her associates, after Trump publicly called for her to be jailed, we will see that there is no way to stop the train. We will be like the sleepwalkers who started World War One. (I have no view on whether that's a useful way to think about WWI, but the idea is clear enough for purposes of the analogy.)

Suddenly we will realize that we are living in a banana republic, and it will be because every time we passed an exit ramp, enough stakeholders found it more advantageous to keep going. There were always higher priorities. There were always practical considerations. The danger of Trump is precisely that his authoritarianism has been fitful and sloppy, so that when it finally, unambiguously rears its head, most people will be taken by surprise. It is all out in the open, but few take it seriously or follow its shambolic twists and turns.

A factor here is that Trump has few powerful enemies. His victims tend to be powerless (e.g. the ~200,000 Salvadorans he is expelling) or odious (Steve Bannon). More on that later.

Losing It

It's hard to stay sane in Trump's America.

“House votes on controversial FISA ACT today.” This is the act that may have been used, with the help of the discredited and phony Dossier, to so badly surveil and abuse the Trump Campaign by the previous administration and others?

— Donald J. Trump (@realDonaldTrump) January 11, 2018

With that being said, I have personally directed the fix to the unmasking process since taking office and today’s vote is about foreign surveillance of foreign bad guys on foreign land. We need it! Get smart!

— Donald J. Trump (@realDonaldTrump) January 11, 2018

The administration is too full of shit to take seriously and too important to ignore.

Quantity Is Socially Determined

As a child, I once heard a sermon built around the following story. A preacher is hired to minister to a church in a town he has never been to. Everyone is anxious to see whether he is good at delivering sermons. Luckily, he knocks it out of the park with an incredibly touching sermon about loving each other and treating each other with charity. The town is well pleased.

But the next week he delivers the exact same sermon, word for word. His congregants are a little puzzled, but they assume it is a glitch and that once he has settled in he will deliver some new sermons.

But the next week he does it again. Now everyone is worried. Is this guy a lunatic? Or is he a one-hit wonder who took years to hone this one good sermon, but who can't actually deliver new material?

The fourth week he does it again. The worshipers go into open revolt. They approach him after the service and demand to know why he is delivering the same sermon over and over.

"Well, I had another sermon ready to go for the second week, but throughout the week I saw that people weren't being loving and charitable, at least not as much as the Bible teaches them to be. So my policy is to deliver each sermon until you really hear it."

I thought about this sermon (the sermon about a sermon) because this is a little bit how social media works. There are a lot of things said on social media that are not really objectionable in isolation. What makes them annoying is quantity. "Oh, so you only care about sexual harassment because you have daughters?" The first time you see this on Twitter, it is provocative and might inspire some reflection. By the time you've seen it 100 times, it begins to feel rude and pointless, and by the time you've seen it 1,000 times you wonder why people are such tiresome jerks.

But of course no individual controls the overall quantity or frequency at which a tweet (or type of tweet) is posted. That's a collective decision that emerges from the decisions of millions of individuals (the people doing the tweeting, and the people retweeting them, and the people following either of those). And for some of those individuals, it's a novel (or near-novel) tweet! Everyone should see that tweet once. But no one should see it very often.

This suggests an architectural problem, but no architectural solution occurs to me. You could try to use clever machine learning or something to shield people from too many near-identical tweets, but that doesn't sound workable. You can ameliorate it somewhat by giving people the ability to tailor their experiences, but you probably lose a lot of serendipitous interactions that way.

And I think the example I gave above is one of the mildest ones I've seen. The experience a lot of people, especially women, have is that at any moment a torrent of criticism can come out of nowhere. Some of it is abusive and unacceptable at any level, but a lot of it is criticism that, at an appropriate level, might be tolerable and even healthy. But it's not experienced that way, it's experienced as a deluge.

Russia's Stroke of Genius

I'm not sure exactly when Russia decided to hack the DNC's and the Clinton campaign's emails, but in retrospect I think it has to be regarded as one of the most successful intelligence operations of all time. This is because it had devastating effect despite revealing almost no embarrassing material. I can't think of a single revelation that, read in context, would have made a bit of difference to anyone. I may be forgetting something, but the most "embarrassing" revelation I remember reading is that liberal Catholic Democrats were emailing each other to complain about the conservative direction of the Church. This was reported as an all-out attack on Catholics, and therefore treated as a huge problem for Clinton, but in reality it was nothing.

So why the devastating effect? Clinton struggled to explain why she had used a private server for her emails while serving as Secretary of State. A lot of voters, including Donald Trump, had a very hard time understanding the distinction between these emails and the emails that the Russians hacked. So every time the hacked emails made headlines, many voters thought that the hacked emails were from Clinton's server. And this was a daily occurrence, because they were dribbled out one by one by WikiLeaks in a blatant attempt to elevate Donald Trump to the White House. (As a side note, a small but notable failure of the media was its frequent use of the word "leaked," rather than "hacked," to refer to the means by which the emails became public, giving it the appearance of a whistle-blowing situation. Some people on the far right and the far left do in fact believe, or purport to believe, that the DNC emails were leaked by Seth Rich, but this is a conspiracy theory that has no basis in reality.)

Of course this was no accident—last year the Intercept published a very good story documenting the astounding degree to which WikiLeaks has become an arm of Putin's Russia, colluding with the Trump campaign, the Brexit movement, and the Catalan separatists. Of course WikiLeak's moral bankruptcy wasn't exactly news to me, but it wasn't until I read the Intercept's reporting that I realized just how low the organization had sunk. For instance, I had not realized that, presumably at Putin's behest, it tried to discredit a witness to the assassination of the anti-Brexit politician Jo Cox.

And then of course there came Comey's notorious letter to Congress related to Clinton's email server. Again, in the public imagination these emails were conflated with the emails that had been hacked, and so the stories merged in the public imagination.

So in other words, of the many ways Russia could have interfered in the U.S. election, hacking Democratic emails was amazingly fruitful. It was probably more effective than, say, assassinating a major Democratic politician (although who knows, with WikiLeaks' help that might have turned into a propaganda bonanza as well). I can't imagine any other intervention that could possibly offer the same value per ruble spent.

Thinking About Cities with Paul and Zed, Part 2

In my previous post, I argued that when small cities go into decline, what happens is not so much that their populations shrink dramatically (though they may), but that working-age residents are replaced by retirees. Jobs for the remaining workforce are concentrated in sectors providing goods and services to the elderly, health care being an obvious example.

Now I want to focus on whether this should be seen as equivalent to disappearing entirely in Krugman's framework. I hinted at arguments for this conclusion in my previous post, but unfortunately they are not easy to explain in detail, which is why I've written a separate post. All of the following draws on The Spatial Economy by Masahisa Fujita, Paul Krugman, and Anthony J. Venables.

I'll start with "base-multiplier" analysis. Each location has an export sector providing goods and services to the outside world and a nonexport sector providing goods and services to local residents. You can think of the export sector as the "base," with its size fluctuating based on a wide variety of factors. The nonexport sector, by contrast, is essentially a function of the export sector. It consists of (A) goods and services provided to workers in the export sector, (B) goods and services provided to the workers employed in (A), (C) goods and services provided to the workers employed in (B), and so on. This is why the term "multiplier" is used—the nonexport sector is a series of multiples of the export sector, each one smaller than the one before. (Each step yields a smaller multiple because each worker spends a fraction of her income on imports. So you might have $10 of export income supporting $6 of nonexport income, which in turn supports $3.60 of nonexport income, and so on.)

The thing to recognize here is that while the nonexport sector may be much larger than the export sector in any given location, it is the export sector that determines the ups and downs of the local economy. Changes in the size of the export sector propagate through the local economy and end up being reflected in the size of the nonexport sector, and not vice versa. (An interesting variant on this was proposed by Allan Pred. As a city grows, it may become large enough to support certain activities that require a minimum scale to be profitable. When this happens, imports are replaced by a new part of the nonexport sector, increasing employment and population. So the nonexport sector is not always merely an echo of the export sector, but for our purposes we can view it that way.)

So the problem for small industrial cities is that they are losing their export sectors. This should require them to shrink, but by how much?

Agriculture is the classic export industry that supports non-urban economic activity. The existence of an agricultural workforce means that our economy can never completely urbanize. There will always be small villages serving farmers' needs, and larger villages and towns providing more specialized services. Although Krugman didn't emphasize these villages and towns in his blog post, he clearly thinks they will always exist (unless agriculture is totally automated, I guess), and so he doesn't think small cities will truly disappear. They will simply shrink to a level that can be supported by the local export sector, which at worst would be the local agricultural sector. This implies that the cities will shrink until they are quite small—agriculture is too spread out and employs too few people to support large population centers.

But to take a step back, what is an export sector? I gave the literal definition earlier. But we shouldn't think about it so narrowly. For purposes of base-multiplier analysis, an "export sector" can be any activity that brings money in from the outside. It could be tourism, it could be remittances, whatever. Retirees receive Social Security, Medicare, Medicaid, private pension payments, etc., and of course they also spend down their savings. So they can form the base of a local economy in the same way that an export sector can, but unlike agriculture, they need not be spread thinly over the landscape. In particular, they can cluster in small formerly-industrial cities, where housing is cheap and where they support a nonexport sector specializing in health care and similar sectors.

So consider a fading industrial city. As the traditional export sector (manufacturing, usually) disappears, workers leave to find jobs elsewhere, and housing prices drop. The city likely has a decent health care sector already (in fact, many of the legacy industrial firms provided very generous health insurance and created large, advanced health care industries—this was certainly true of Peoria). So the city becomes a magnet for retirees, who find the cheap housing attractive and the health care services at least adequate. Jobs shift from the export sector (working at a factory) to the nonexport sector (working at a hospital or as a home health worker or whatever). The city stops shrinking, or shrinks very slowly. It still shows up as a relatively large population center, much larger than the agricultural village that it could theoretically become. For the reasons articulated by Pred (see above), these cities may support industries that smaller towns can't, and so their manufacturing sectors will not necessarily disappear entirely.

So where do these cities stand in terms of "disappearing" in Krugman's framework? On one hand, they still have decent-sized populations with spending power, and as noted they may even have small manufacturing sectors serving the local region. To the extent retirees consume a particular good or service, their presence in a city makes it more promising as a location to produce that good or service. If the good can also be exported, then you can imagine a town booming as it becomes the center of a cluster of manufacturing activity focused on that product. This would support Zed's contention that small cities can bounce back after long decline.

But on the other hand, these cities have relatively small workforces and, by assumption, they are far from major urban markets. It is hard to see why anyone would locate a manufacturing business in one of these cities instead of an exurb, which will tend to have a larger workforce and be much closer to a city with a larger absolute number of retirees. It could happen by random chance, of course, but this seems like the kind of highly unlikely occurrence that Krugman's point could accommodate with only minor modifications.

Thinking About Cities with Paul and Zed, Part 1

I got into a Twitter discussion with Zed about something Krugman wrote about cities (in a blog post and a series of tweets). The discussion itself turned on fairly trivial points, but I want to make a few broader points about the way that I expect small cities to fade.

I take Krugman to be engaging in the following intellectual enterprise. Spatial economics doesn't provide any obvious reason that small industrialized cities far from major metro centers should exist. One response would be to play around with spatial economics until you come up with an explanation. But Krugman proposes something a bit more radical. Maybe small cities only exist because we haven't yet reached equilibrium. In the very long run we should expect them to disappear. In particular, most industrial cities owe their existence to a string of good luck involving the location of a cluster of economic activity. A few rode their clusters all the way to big-city status, but many more didn't make it, and we should expect most small cities to go into decline as their good luck runs out.

My claim will be that small cities have already disappeared much more than it first appears, if you are considering economic activity rather than overall population. The end state of small cities is not so much to disappear in a literal sense as to turn into retirement centers revolving around related industries such as healthcare. Since this doesn't necessarily involve a large population decline, it can occur without showing up in the raw population numbers.

First I think it is helpful to take a minor detour. It is periodically reported that New York City has a large net domestic out-migration rate. In other words, a lot more people moved from NYC to elsewhere in the country than from elsewhere in the country to NYC. This would superficially appear to indicate some weakness in NYC's economy or its growth prospects, and it is regularly reported as bad news for NYC. I have been fooled by this reporting in the past. It's important to understand that in fact the most dynamic, thriving cities in the U.S. also tend to have the greatest rates of domestic out-migration. This post does a great job explaining why, so I urge you to read it. The short version is that cities like NYC tend to attract a lot of international migrants, who aren't counted in net domestic migration numbers (that is, they aren't counted unless/until they leave the city for elsewhere in the country), and that people tend to move to NYC when they are young and then move out when they are older (sometimes after having children). These factors make it seem that NYC is shedding residents when really it is growing fairly rapidly.

What I want to focus on is the post's conclusion, which considers the mirror-image situation:

Conversely, many rural and exurban counties that have become retirement havens are experiencing the opposite effect. Loss of (and inability to gain back) a young adult population has left them with chronically low birth rates and an aging population. This results in rapid natural decrease and population loss, which is then offset by a constant influx of older adults and retirees taking advantage of the low cost of living and slow pace of life.

In other words, the flip side to NYC's large negative net domestic migration rate is a positive net domestic migration rate in places that are, by most measures, stagnant or in decline. It is what I would expect to observe in the small industrial cities that Krugman is writing about.

Now back to my main point. When a city that formerly served as an industrial center loses its local industry, I would not expect its population to shrink rapidly. Instead, I would expect its population to get older as its young people leave and its low rents (or cheap houses, which are basically the same thing) attract retirees. This has all kinds of consequences. One notable consequence is that, pace Zed, cities in decline should become less and less promising for new businesses as their labor forces shrink far more rapidly than their populations. (I suppose an exception would be businesses catering to the elderly, but bear in mind that is not what we mean when we speak of economic clusters. For an economic cluster to form, the business would have to export goods or services of some kind.) In fact, the working-age population is shrinking in most of the country.

This pattern seems especially unfortunate given that, at least in my experience, few small cities in the U.S. are very walkable or otherwise conducive to a carless lifestyle. And yet this is where we tend to park our elderly population, leaving them isolated and lonely. I think this is one reason for our toxic politics. Our retirees end up in these horrible places with nothing to do and nowhere to go, and they spend all their time getting riled up by cable news and social media.

I would also expect an increased brain drain from small cities as their economic clusters disappear. The remaining jobs focus on providing goods and services to retirees. These jobs may pay a decent wage, but they offer little room for advancement. More ambitious and/or talented young residents will go to big cities for jobs with significant advancement opportunities. (This has always been the case, but previously it was somewhat offset by the local industry. By way of example, when Caterpillar was in Peoria it provided a lot of jobs with significant advancement opportunities. Those jobs are now at its new headquarters near Chicago.) This feeds into my earlier point about old voters. If you're a retiree in a declining industrial city, you look around and see few good jobs, a bunch of disproportionately unambitious or unskilled young native-born people, and all the social problems that come along with that. It looks very different from the view you would get in a relatively young, dynamic city like Chicago, even though Chicago faces its own serious social problems.

So in short, big cities will not necessarily grow all that rapidly in terms of population, nor will small cities necessarily shrink. But their demographics will shift (and have shifted) considerably, with big cities skewing younger, more ambitious, more skilled, and generally more affluent. This is what it looks like to shift to a new equilibrium, and it has already happened more than you would imagine from aggregate population numbers. Increasingly we live in a country where economically important activity is highly concentrated in major metro areas, while smaller cities fade away. (In another post I will elaborate on the argument that when a city has gone over to the retirees, it has essentially already faded away.)

What is to be done? Driverless cars may ameliorate things, to the extent they give retirees more mobility. As a society we should probably make it cheaper and easier to live in big cities. (I don't mean to exaggerate how big these cities need to be, by the way. Salt Lake City has about 325,000 residents, and it's plenty big to support real economic activity. It probably helps, though, that it is the political capital and the only major city in a large area.)

But this is a difficult problem, because it's very hard to figure out the welfare effects of increasing the size of big cities while decreasing the size of small cities. Fewer people would be left in miserable circumstances, but the circumstances would presumably be more miserable. Maybe there are some small cities that can and should be boosted rather than shrunk. This might be especially valuable in geographic regions that would otherwise lack a real city for hundreds of miles. But these calculations are inherently nearly impossible to do. The case for urban-friendly policies rests mostly on the positive things cities accomplish, and not the secondary effect on residents of small cities.