Midweek Links 03/19/2025
1) Two opinions I posted recently on Substack Notes:
a) Trump is unwittingly (I think) doing a great disservice to Putin and his ambitions for restoring Russian power. He has induced Europe to come to its senses, recognize that the U.S. has become an unreliable hegemon, and step up its quest for unity and self-protection. With the Poles flanking Ukraine, Sweden and Finland backstopping the Baltics, and Germany appearing to move — finally — to face up to its obligations, Russia will be more clearly revealed to be the very weak power it actually is.
b) The hundreds of thousands of people who work for Tesla, its supplies, and dealers don’t deserve to suffer for the political insanity of Elon Musk. Nor do the many individuals who have their retirement savings invested in 401k’s that own Tesla stock. There are better ways to oppose him and the administration he serves than boycotting Tesla or vandalizing cars. We should be able to separate Tesla from one of its principal shareholders (13%). That separation, after all, is one of the defining characteristics of the free-enterprise system.
2) Many on the left equate — or at least liken — the program of the MAGA movement and its political arm, the second Trump administration, to some variety of classical liberalism/libertarianism, perhaps because of occasional libertarian-seeming pronouncements from Elon Musk or Peter Thiel. But any resemblance, as the saying goes, is “purely coincidental.” The “small government” or “minimal state” of classical liberalism — as propounded, for example, in Hayek’s 1960 masterwork, The Constitution of Liberty, exists to provide the necessary politico-legal framework facilitating a maximum of liberty for economic enterprise and social life. To prevent it from morphing into a Hobbesian “Leviathan,” it is constrained by a fragile system of checks and balances/separation of powers that requires constant vigilance and reinforcement from lovers of liberty.
The Trumpian state, to the contrary, is an all-powerful executive, running roughshod over the legislature and the judiciary, and attempting to penetrate and subordinate all civil institutions, including private enterprises, universities, the media, and the innermost recesses of family life, all in the interest of a reactionary, nostalgic, dystopian populism, which is trying to restore the oppressive cultural values of a bygone era.
These points are made, more eloquently than I can manage, in this address by the Cato Institute’s Tom Palmer on the dangers any sort of populism, including the Trumpian, creates for liberty, constitutional government, individual rights, and the rule of law. Says Palmer, "This new right is not a conservatism focused on preserving the liberal gains of the past—the elimination of slavery, the securing of equality before the law, of limited constitutional government, and of the rights to worship, to speak, to acquire and own property, to trade on mutually agreed terms, and to live as one likes with one’s own resources. Instead, it advances a radically opposed agenda that seeks to centralize absolute, arbitrary, and unaccountable power in the hands of the executive alone."
3) Boston University economist Laurence (Larry) Kotlikoff is arguably the country's leading expert on Social Security. The DOGE crew is chain-sawing through the SSA, he says: "Musk’s goal seems clear — gum up the System’s unbelievably complex and dilapidated works to the point that it will no longer pay benefits or correct benefits on time, if at all. His method? Fire or incentivize the immediate retirement of everyone with knowledge of how the 89 year-old machine, with its 20,000 plus pages of rules (no joke), is supposed to work — especially those who know how to fix it." Larry agrees with Musk that it's a Ponzi scheme, but he has a way of fixing it, not destroying it.
4) European security analyst Ian Kearns discusses "The Charade of Ukraine Ceasefire Diplomacy." As the title implies, he believes that the talks are a distraction, that the Europeans are not ready to provide forces to backstop Ukraine's security, and that the war is far from over.
International relations scholar Ricardo Martins, whose substack is called Mastering Geopolitics, reports that Erdoğan is offering Turkey's military might to Europe in exchange for EU membership. Unclear whether the EU will get past the longstanding resistance to Turkish membership coming from several countries. Geopolitics has "rhymes" historically, considering the centuries-long conflict between Russia and the Ottoman Empire.
5) Using the Roman concept of triumvirate (rule by three men), David Friedman describes the respective roles of Trump, Vance, and Musk in the current effort to remake the federal government.
6) Blue states like New York, California, and Illinois are losing population, while red states like Texas and Florida are gaining. Nate Moore explains the implications for future presidential election and House maps, very unfavorable for the Democratic Party unless it can up its appeal to swing voters.
7) Rajiv Sethi, who teaches economics at Columbia/Barnard, discusses the cancellation of $400 million in federal grants as just the first step in a sustained attack on the governance of U.S. universities by the Trump administration. The targets of the attack, the elite universities, he says, are in a weak position because they have lost a great deal of public trust.
And this is the perspective of computer scientist Scott Aaronson, who doesn't teach at Columbia but has many friends there. He applies some game theory to the possible outcomes for Columbia.
https://scottaaronson.blog/?p=8717
8) Alex Nowrasteh explains and critiques Trump's proposed changes to the U.S. system of legal immigration: "President Trump plans to rewrite—or, rather, write over—the Immigration and Nationality Act in the coming week. This action would be an absurd affront to the Founders’ constitutional design, no matter how he chooses to do it, but Trump is reportedly planning to reinstate a system of nationality-based discrimination that Congress first adopted in 1924 before repealing it in the Immigration and Nationality Act of 1965." The new system, Alex says, will be discriminatory and arbitrary.
Tim Taylor reviews the basic economics of international trade, using a recent paper by Maurice Obstfeldt to explain that the idea that a "trade deficit" is a negative for the economy -- and a justification for tariffs -- is wrong because based on a misunderstanding of the components of GDP and how they are interrelated. A great primer for those needing conceptual clarification on the issue.
https://conversableeconomist.com/2025/03/14/mistaken-identities-the-international-trade-version/
9) Economist Loren Brandt, writing at the substack of the Stanford SCCEI (Stanford Center on China's Economy and Institutions), describes how China's government is attempting to use industrial policy to raise the growth rate and assesses the likelihood of success.
Scott Sumner explains why deflation is once again threatening China's economy. Dismissing many of the usual culprits, he shows that it results from the country's monetary policy as constrained by its exchange-rate regime. "Because of China’s exchange rate policy, Chinese monetary policy is essentially made in the USA."
https://www.econlib.org/chinas-deflation-made-in-the-usa/
10) A very interesting discussion of the effects of increasing social complexity and impersonality -- including reliance on impenetrable algorithms -- comes from Cyril Hédoin, professor of economics at the University of Reims Champagne- Ardenne. These social conditions can lead to individuals "picking randomly one or a few hypothetical reasons by identifying a scapegoat, endorsing myths or conspiracies, or blindly following some charismatic leader."
