Bullet Points: Big money ruins everything+pronatalism's fake apocalypse
I’m vacationing in California this week. (Take the family to L.A., they said… the weather is always perfect in L.A., they said…). I’ve read a couple of pieces during the trip that I want to share and comment on.
(1) Elon Musk’s Shadow Rule, by Ronan Farrow. (File under: Big Money Ruins Everything)
Farrow reports the hell out of this one. The broad contours of the story will be familiar to anyone who has followed Musk’s antics closely this past year. But the details still set you back on your heels once he has laid them all out.
Musk’s companies are critical infrastructure. When Ukraine mounted a counteroffensive and crossed into Russian territory, their comms stopped working. Their military is reliant on Musk’s Starlink network, so the war effort is vulnerable to his whimsy. Without SpaceX, NASA can’t transport astronauts to and from the International Space Station. Without Tesla’s charging stations, the U.S. can’t meet its electrification goals.
Reading the article, I found myself thinking about Sam Bankman-Fried’s plan to buy the island nation of Nauru. That whole story was bonkers, fundamentally less serious than Musk’s centrality to U.S. foreign and domestic policy. But what stands out to me is that he could have done it. If SBF had just kept his mouth shut and not pissed off CZ in November 2022, his ponzi scheme could easily have kept chugging along for another few months. What if he had managed to purchase a whole country before the bottom dropped out of his scheme? I imagine it would've posed some extradition problems, right? Like, instead of the U.S. asking the Bahamas to turn SBF over for trial, they might have been asking Nauru to hand over their self-annointed philosopher-king. And I don’t know how that works, because it probably isn’t the sort of problem that has come up very often. People — even extremely rich people — aren’t normally in a position to buy nations. The rules have never applied equally to rich and poor, but this is something else entirely.
Likewise, what Farrow’s reporting makes clear is how Musk’s dominance of multiple critical industries multiplies his influence and makes him effectively ungovernable.
I’ve previously predicted that Tw(X)itter is going to shut down as soon as the inevitable fines from the FTC arrive. That’s the moment when Musk will have a face-saving opportunity to walk away. And I still think that outcome is more likely than not. But, reading the Farrow piece, I found myself wondering if maybe the fines won’t arrive at all — not because the company isn’t blatantly violating its consent decree, but because of the thorny cost/benefit calculus it presents to the Biden administration.
Let’s say the potential Tw(X)itter fine is, like, $2 billion. That’s more than enough to bankrupt the company. It’d be on the high side, but not unprecedented. What’s to stop Musk from saying “go right ahead but I’m going to cause $2B of damage to your foreign policy priorities and I’m also going to need an additional $2B to handle transporting your astronauts. Oh, and I’m slow-walking the renewable grid, grinding down one of your major domestic policy achievements. Maybe the next government will treat me better.”
This seems, at the very least, like a credible threat. It would be ridiculous, and ultimately self-defeating, but also entirely in-character for the guy. If I worked in the Biden administration, that would give me pause.
It’s like the old saying about bank loans. If you owe $500,000 to the bank, then you have a real problem. If you owe $500,000,000 to the bank, then they have a real problem.
And the thing is, the more I read about the history of the digital future, the more convinced I am that it didn’t need to be this way. This extreme concentration of wealth wasn’t a natural outgrowth of the “digital revolution.” If we could re-run history, with all the same scientific and engineering breakthroughs and all the same political and economic actors, but we just had different tax policies, then we would be so much better off right now. PayPal would have worked out no different if the “PayPal mafia” had gotten 30% less absurdly wealthy through the sale of the company.
Our government chose in the late 20th century to tax the rich less, and to hollow out the administrative state. It chose in the early 21st century to stop enforcing antitrust law and, again, to tax the rich less. And now, as a direct result, we are beholden to a handful of way-too-rich assholes. And the richest of those asshole has a massive Ketamine habit. And he’s going through a mid-life crisis. And he just generally kind of sucks.
There’s no easy out at this point. You can’t pass a law saying “no one can run multiple huge, successful companies.” We can (and should) reinvigorate competition policy and take antitrust seriously. We can (and should) reinvigorate the public sector, but that’s a longer-term project.
In the meantime, holy crap! Elon is apparently taking way too much ketamine, and the war in Ukraine hinges to a significant degree on his mood swings.
That is so very bad, in a way that ought to leave us asking “uhhh, how did we get to here?”
(2) Noah Smith examines the economic case for pronatalism.
I’ve written previously about the pronatalist movement (Pronatalism: Elon Musk’s fakest public alarm). Part of my argument was that the apocalyptic warnings from the pronatalist crowd simply don’t add up.
This week, econ blogger Noah Smith took a serious look at their arguments (Humanity is going to shrink). It’s an interesting piece, the most serious discussion I have seen regarding the actual social and economic consequences of global population decline. Smith concludes that there is a lot of cause for concern here.
It’s well worth a read. That said, I’m still entirely unconvinced that this is a civilizational problem. It seems to me that he is conflating human civilization with capitalism. They are not the same thing.
An aging, shrinking global population is going to be a problem for capitalism writ large. Capitalism requires growth to sustain itself. Companies need more potential customers. Aggregate demand needs to go up, not down. Fewer workers, supporting an expanding elderly population, will strain the tax base and muck up all sorts of macroeconomic trends. People will have to work longer and harder to accumulate any sort of wealth. It’s not going to be great.
But, ultimately, so what? Is that really what all this fuss was about?
The choice that governments will face, decades from now, is to either (a) provide generous social services for the elderly or (b) leave an aging population to die with far less dignity. The former means higher taxes, and brewing generational resentments. The latter is cruel. But it is cruel in all the same ways that we are already cruel to so many parts of our society. This isn’t a civilization-ending threat. It’s just an expansion of the parts of capitalism that economists, politicians, and entrepreneurs prefer not to dwell upon.
(As an Xennial, I just sort of assume we’ll end up with option b. I figure my generation will be denied the comforts in old age that were provided to the baby boomers. Seems kind of fitting, y’know?)
To be clear, Noah Smith isn’t making the type of apocalyptic arguments that Musk and the pronatalists are making. He does not claim that this is going to be worse than climate change. He’s just evaluating the likely implications of population decline under capitalism. It’s a thoughtful piece.
But a lot of people with far too much money and power are saying that sort of thing. And those people are ridiculous.
Because if we are going to think holistically about the future, we have to take the threat of climate change seriously. Cities are going to be underwater (and/or they’ll undergo extreme modifications to adapt to the storm threats. Think of the tax dollars!). Florida and Arizona (the states where we currently send all our boomer retirees) are going to be rendered unlivable. Low birth rates are the least of our worries.
And, crucially, the impacts of climate change are self-reinforcing. The more carbon we pump into the atmosphere today, the harder adaptation becomes tomorrow.
The impacts of depopulation do not accumulate in nearly the same way. A crisis of not-quite-enough-aggregate-babies in 2023 does not doom the people of the world circa 2053. You have to really twist yourself into knots to think otherwise. If the population stabilizes or falls for 30 years, that locks nothing in for the next 30 years.
It just creates problems to be solved.
The weirdest thing in the world about capitalism is that its chief defenders and proponents tout its intrinsic, natural adaptability--a system that doesn't need command inputs from human managers or planners, that routs goods and services to where they are most in demand, adjust prices based on supply, incentivizes producers to make more or less of a commodity based on need, grows wealth...
...and then they're the ones clutching pearls most desperately whenever it comes up against a problem that ostensibly its adaptability shouldn't be fazed by. Not enough workers for difficult, boring-but-necessary, or dangerous jobs? Isn't that precisely where the orthodox theory of capitalism says that wages should naturally rise, until people are properly priced in to do that work? (Or where employers are properly incentivized to find ways to make those jobs less difficult, less boring, less necessary or less dangerous and thus attract more workers at the going price?) Does that make the commodity or service being produced too expensive? Well, at some point either the buyers will have to pay what it costs or decide they don't need the commodity or service. Or maybe there's some other work in the production process that is being artificially overvalued. (Hint: the CEO? The whole C-suite?)
Same deal here. A shrinking population that skews older? Either adapt working conditions to make them attractive to older workers, etc.; adjust production to the population that you have rather than some imaginary one you want, and so on. Isn't this what we're told capitalism just did naturally and all that?
Now if that's all a load of hooey, then yes, maybe there's an issue. And you know what, maybe neoliberalism and wealth inequality is the *reason* that populations are shrinking and aging--that social democracy created security and continuity that made more people want to have families and more confident about the future for their children. Maybe the more that people see others going broke because of terrible health care, ballooning housing costs, the insecurity of gig work, etc., the less inclined they are to have children *and* less inclined to work hard on their own behalf. Etc. But people skeptical of the idealized sketch of capitalism already knew that for any problem of this kind, some form of collective action through the state is the only possible answer in our present system.
"Fewer workers, supporting an expanding elderly population, will strain the tax base and muck up all sorts of macroeconomic trends. People will have to work longer and harder to accumulate any sort of wealth. It’s not going to be great."
I know this is the conventional wisdom but I'm not sure it's true. Consider two factors: housing costs and wages. Over the past generation, housing costs/values have far exceeded inflation (in large part due to under-supply), and wages have lagged inflation (due to suppressed worker power). In a future where there are fewer people over time, it's easy to see how this flips: a declining population leads to an over-supply (and thus falling costs) of housing, while a shrinking work force is empowered to demand higher wages. They earn more and have to pay less for their biggest budget item, and so: more wealth!
Now, yes - an aging population will need more (expensive) medical care - but there's a huge amount of deadweight loss in both the US healthcare system and our consumer economy, generally. Realigning both will be work but I'm not freaking out about that as much as I am about, e.g., ocean acidification.