The True CPI Just Jumped

I recently voiced fear of coming inflation.  Yet on reflection, high inflation is already here.  While measured inflation remains low, I’ve been arguing for years that CPI bias heavily distorts official measures.  My point has always been that official measures of inflation are too high, because official measures fail to properly account for rising quality and variety of goods.  In the last month, however, all this has suddenly reversed.  Due to the coronavirus, official measures of inflation are now much too low.

How so?  Most obviously, the variety of available goods has sharply fallen.  Roughly half the products I normally buy are no longer on the shelves.  I’m hardly starving, but I’ve had to fill my shopping basket with a lot of goods I would not buy under ordinary conditions.  After many years of claiming that product variety is a great unmeasured gift, consistently compels me to admit that the loss of product variety is a great unmeasured shock in the other direction.

Variety aside, the quality of goods has also plummeted.  Most notably, shopping convenience is way down.  Back in February, I could pop into any store, swiftly pinpoint what I wanted, and buy as much as I liked without worrying about infection.  No longer.  Today’s best-case scenario is that I pay the same amount as last month for a greatly degraded shopping experience.  The actual physical quality of the goods has fallen too; I now have to settle for half-crushed bread, worse cuts of salmon, and so on.

Can’t I solve some of these problems by switching to delivery?  Yes, but that highlights yet another source of hidden inflation: outlet bias.  During the last few decades, consumers have heavily switched to innovative stores like CostCo that provide high-quality products for low prices.  Official CPI measures have failed to properly account for this transformation.  In the last few weeks, however, we’ve had outlet bias in reverse.  Stores like CostCo have been so congested (and rationed!) that many people have switched over to higher-cost, lower-quality stores they would normally avoid.

This includes delivery services like Instacart.  While I’m grateful they’re in business, Wegmans food delivered via Instacart easily costs 30% more than I’d normally pay.  The list prices are higher, there’s a delivery fee, and don’t forget the tip.  True, I don’t have to go to the store, but back in the good old days of February, I liked going to the store.  (I enjoy getting out on weekend mornings, and waiting around the house for deliveries is a drag).  Upshot: I really am paying 30% more to shop at an outlet that is inferior to what used to be available.  And I’m hardly alone.

The optimist in me says that this drastic sign-flip for CPI bias is temporary.  Yet since supply chains – especially international chains – have been seriously disrupted, much of the degradation in the quality and variety of goods that I’ve described will soon be replaced with other degradations.  You can hardly wax rhapsodic about the cheap and handy products China sells us without lamenting the many months we will have to go without.

I am well-aware that gasoline and a few other goods have suddenly gotten cheaper.  Yet overall, we have endured a rude shock.  In normal times, CPI bias means that we fail to appreciate our high and rising prosperity.  During this crisis, CPI bias means that we fail to appreciate how much we’ve lost.

Here’s to better times!

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Love the Very New and the Very Old

I love old farms and skyscrapers under construction, old cars and Elon Musk’s newest spaceships. I think my ideal way of living would consist of working on a farm (or hunting/gathering out in nature) during the day and working on a high-tech project at night (call it “Jeffersonian futurism.”)

I love the very old and the very new. I see no conflict in that – but I do see a necessity.

Futurists seem to miss the fact that old things contain worthwhile wisdom and usefulness. Traditionalism seems to miss the fact that static institutions become corrupt without change. Meanwhile, the modernists are so tied up in the recent past as to be blind to both tradition and innovation.

But in the years ahead, it’s the futurists who will deliver us interplanetary travel, life-saving medical cures, and clean and renewable nuclear energy in the years ahead. It’s the traditionalists who will help us to remember the human values of fidelity (marriage, etc), individual dignity, self-reliance, and honesty are the foundations of a society that can enjoy technological progress properly (i.e. without self-destructing).

If we’re to appreciate and encourage this outcome, we need a way of thinking that embraces the dialogue between the old and new*. We need to understand that the only conflict is between the life-enhancing and the life-destroying, and that either force can be found in our newest inventions or our oldest customs.

Author Ross Douthat recently summed up the interesting fusion he posits will lead us out of the current “age of decadence” – a combination of old-time religion and high-tech futurism:

“So down on your knees – and start working on that warp drive.”

I dig it.

*Credit to Jordan Peterson for first (in my experience) formulating this yin-yang interplay of liberalism/openness and conservatism/orderliness.

Originally published at JamesWalpole.com.

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By The Time We Notice We’re Hungry, It May Be Too Late

“[A]s the top U.S. watermelon-producing state prepares for harvest, Reuters reports, “many of the workers needed to collect the crop are stuck in Mexico …. Without the workers crops could rot in fields throughout the country,” starting in Florida and California where major harvests begin in April and May.

As you can probably guess, the problem stems from the COVID-19 panic. The US State Department has halted routine visa applications and consulates are limiting both staff numbers and staff contact with applicants. That’s making it difficult for the quarter million migrant workers who normally pick America’s crops to get here and get to work.

Most Americans aren’t hungry. Yet.

But unless something changes, we’re going to start GETTING hungry in a couple of months.

And by then, it will be too late. Planting cycles don’t turn on a dime for our convenience and ripe crops don’t wait. They get picked when it’s their time, or they go to waste. We get the food while the gettin’s good, or we don’t get it at all.

There’s a non-trivial chance that Americans are rushing headlong into a horror we haven’t seen since the Civil War — mass starvation — or, at the very least, malnutrition on a scale we haven’t suffered since the Great Depression.

We can’t avoid that outcome with stimulus checks in our mailboxes. All the money in the world won’t buy you a cantaloupe if there aren’t any cantaloupes to buy.

We can’t hold it off with corporate bailouts, either. It’s not money Big Agriculture’s lacking for, it’s permission for its workers to come pick the crops.

If we want to keep eating, our politicians are going to have to knock off this “shutdown” nonsense and let people get back to work.

Yes, even if that means that COVID-19 remains a problem or becomes a bigger problem.

The varying probabilities of catching the disease, and the varying probabilities of dying from it, pale next to the absolute, indubitable, 100% certainty that if we do not eat, we WILL die.

Politicians can’t just shut down major parts of an economy at will, start them back up, and expect things to go well. They can’t throttle the food supply chain without consequences.

We gotta eat.

Which means we’re going to have to insist that the politicians hang their Mussolini costumes back up in the closet and magnanimously permit us to get back to our lives.

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Congress Declares Itself Non-Essential

Around the US, “essential” workers are going to work everyday and doing their jobs, COVID-19 pandemic or not. Factory workers are producing things. Truck and delivery drivers are transporting those things. Grocery store employees and food service workers are making sure food reaches our tables.

Congress, not so much.

When US Representative Thomas Massie (R-KY) tried to require his fellow politicians to actually show up at the Capitol to vote on the biggest one-off welfare handout in human history, and to  record their votes for posterity, all hell broke loose.

House Speaker Nancy Pelosi (D-CA) called Massie a “dangerous nuisance” for having the gall and temerity to suggest that the House get the constitutionally required quorum (216 members) together and put them on record instead of just pretending it had such a quorum and holding an undifferentiated voice vote.

US Representative Peter King (R-NY) said it was “disgraceful” and “irresponsible” of Massie to imply that King should show up for work instead of sitting at home in New York collecting his $174,000 salary, his lavish fringe benefits, and his comfortable retirement package.

President Donald Trump called Massie a “third-rate grandstander” and advocated his expulsion from the Republican Party. I mention this only to acknowledge Trump’s expertise in third-rate grandstanding, and to suggest that he’s not otherwise qualified to so much as carry Massie’s briefcase.

And so it went down on March 27:

Massie called for a recorded vote. The chair pretended to count those standing in favor of a roll call vote and announced there weren’t enough.

Upon Massie’s further objection that the House lacked a quorum, the chair spent four seconds pretending to count to 216 in a nearly empty chamber before asserting that yes, there was a quorum, and declaring the bill passed.

If any other body pulled that kind of stunt, its members would find themselves in court answering to charges of honest services fraud. But when Congress lies, even as openly and arrogantly as it did here, it usually gets away with doing so. Massie presumably lost this battle.

But there’s a larger war on over the credibility of American politicians and political institutions, and if we listen to what Congress is actually saying, it just shot itself in the foot in public.

Here’s the message Congress just sent America:

“We as individual members of Congress are far too important, and Congress itself is far too un-important, for us to be expected to do our jobs if doing our jobs entails any personal risk, or even inconvenience.”

Or, to put it a different way, “we’re far more important than Subway sandwich artists, and the House of Representatives isn’t nearly as important as a Subway  store. Our safety and comfort is paramount and the job we do isn’t important enough to do right.”

I’m not sure I agree with Capitol Hill’s (when they bother to be there) perfumed princes and princesses as to just how very special and important they are, but I think they’re onto something with the second part.

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Open Borders: Now Do You See What We’re Missing?

In Open Borders, I never claim that immigration restrictions make life in the First World bad.  I don’t try to scare people into supporting more immigration, a la, “Without more immigrants, we’re doomed.”  What I claim, rather, is that immigration is a massive missed opportunity.  While life is fine the way it is (or was, until a month ago), there is no reason to settle for “fine.”  If there is a dependable way to dramatically improve our lives, we should seize it.

What then are we missing?  The standard and correct answer is: tens of trillions of dollars every year; see Clemens’ classic “trillion-dollar bills on the sidewalk” article.  Allowing human talent to move from low-productivity countries to high-productivity countries greatly enriches mankind.  A mind really is a terrible thing to waste.  Until recently, though, these tens of trillions of dollars of unrealized gains have been awfully hard to visualize.

Now, human tragedy provides crystal clarity.  If you examine almost any American population center today, it doesn’t look bad – just empty.  Enormous economic sectors – restaurants, entertainment, retail, and much more – have suddenly shut down to fight coronavirus.  As a result, tens of millions of folks are stuck in their homes, wasting their talents, and contributing little to the world.  An optimist would correctly remind us that we’re hardly starving, and we have Netflix.  Yet an optimist should also gladly acknowledge that it would be awesome to suddenly recover all that we’ve lost.  If the virus vanished overnight, a Niagara Falls of missing productivity would be unleashed.

Imagine, though, if we’d never known anything better than what we have today.  If you claimed that we were missing trillions of dollars of gains, most people would be deeply pessimistic.  Some would bemoan the fate of grocery stores if restaurants were legalized, or warn that releasing tens of millions of homebodies into the workforce would lead to catastrophic unemployment.  The main mental block, though, is that people would have trouble visualizing a straightforward way to make us trillions of dollars richer.

If you can get over this mental block, if you can see what we’ve lost, then it’s only a small step further to see what we’re missing.  If people were free to take a job anywhere on Earth, humanity would have more agriculture, more manufacturing, more services.  We would have more restaurants, more homes, more elder care.  We would have more doctors and more janitors, more meal delivery and more cars to deliver the meals.  If coronavirus can eliminate 90% of the restaurant business, open borders can add 90% to the restaurant business.  You’ve seen the former with your own eyes, so you should have no trouble seeing the latter with the eye of the mind.

To be fair, you could demur, “We’ve shut down most of the domestic labor market to prevent the spread of a horrible disease.  Similarly, we shut down most of the international labor market to prevent something similarly horrible.”  The difference, of course, is that the coronavirus is all too real, while the horrors of immigration are speculative at best.  Indeed, on inspection they’re largely imaginary.  And while many will now be add infectious disease to the list of social ills to blame on immigrants, that argument too makes little sense.

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Keep Healthy Habits, Help Others

How will you spend your time now that civilization has been canceled by executive command? Is it time to brush up on your stone-age skills?

This would be a good time to familiarize yourself with the edible wild plants growing in your yard and to learn the natural substitutes for toilet paper.

Learn to make and use an atlatl and stone-tipped spears in case you need to bring down a mammoth. Pool cues might be a good raw material for this sort of thing. Of course, the recent scarcity of mammoths could put a kink in this plan.

A bonfire in the backyard for roasting your kill would probably attract the wrong kind of attention anyway. This should be a last resort.

Perhaps you could choose to go to the opposite extreme and retreat to a virtual world for a fortnight or two, where your biggest dangers are ransom-ware and scammers promising eternal love in exchange for airfare to America.

Or will you ignore the hoopla?

I’m always in favor of taking precautions against unnecessary risks, but people can go overboard. There are times precaution gets replaced by panic. Politicians love taking advantage of panic since they rarely pay a price for being wrong. They claim the credit if people believe they got it right, but you pay the price every time they are wrong.

I’m going to hope you’re a regular reader of this column and as such you’ve listened to my frequent suggestions to be a “prepper” and stock up on essential supplies in case of unforeseen circumstances. This means you were already prepared and didn’t get caught up in the last-minute scramble for essentials … or for the luxuries some people consider essential.

Aren’t you glad you listened?

The phrase “May you live in interesting times” is said to be a curse. I’m not certain it is. Would you rather be bored to death? Times can be interesting, but — when you’re ready for whatever life throws at you — not cursed.

This too will pass. You’ll be fine when all is said and done. There are lessons in all this. Smart people will learn and remember these lessons; others will stay clueless.

Don’t let the hand-wringers and fear-mongers upset you. Do things you already know will help you stay healthy. Healthy habits haven’t suddenly become dangerous. Lend a hand to those who, due to age or health conditions, may be more at risk. Together, but maybe not within coughing distance, we will get through this.

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