We Don't Need to Destroy the Economy to Save It

availability, optionality, sermons

The answer must be in the attempt.

Adam Ozimek published a piece in the Atlantic that basically boiled down to ‘we don’t have to destroy the economy in order to fix it’ - which I love. There’s nuance, of course (rate hikes helped, we needed a bit of a slowdown) but the general idea that we don’t need unemployment to rise to get a Recession to sucker punch inflation is really good - we don’t need excessive pain to get progress.

It’s all kind of icky.

Americans don’t realize how good they have it despite all the problems we have (and there are many). Jamie Dimon did a really wonderful speech at The Economic Club talking about how lucky we truly are, even with the issues. Economically speaking, things technically are getting better.

And there are three general responses when you tell people this -

1. “Wow, I still am struggling to make ends meet, real wages have been stagnant and the cost of living is still sky high”

2. “I could see that - I still don’t feel quite comfortable but I’ve found work relatively easily despite layoffs in my industry”

3. “You’re an idiot and a liar and I am perched precariously on a stack of gold bars”

And all of these responses matter.

The Economic Data

When we look at the economic data, it’s looking decent. I mean ADP came in beyond hot today alone -

• Market repricing a recession: I really like Conor Sen’s shorthand for recession odds, comparing Carnival Cruise Line stock and SOFR futures - the stock is up 100% and SOFR future have moved 150bps, meaning that “market pricing odds have fallen from 60-70% to 15-20%”

• We have sort of had a soft landing: Goldman Sachs lowered their 12-month recession probability to 25% because they “felt like we’ve seen enough” in terms of labor market rebalancing (aka its chilled out enough to where we should be able to avoid a Recession, and therefore get to a soft landing).

  • But as Mark Copelovitch points out - “if what we've had - from peaks of 14.7% unemployment & 9+% inflation, with no decline in real income & 2+ years of job growth - isn't “it” (a soft landing) the term’s useless”

• The economy is okay, but people still aren’t vibing: Michael McDonough published an interesting chart that walked through the ‘economic surprise - hard data vs soft data’ and stated that “it suggests the actual economy is doing better than expected, but economists think people's opinions of the economy are better than they really are” - the economy is good, but not as good as people think that other people think the economy is.

• People talk too much: Neil Dutta wrote a piece for Insider stating that Wall Street should chill with the Recession calls because they are spooking everyone out. He writes “Growth pessimists seem to lack logical consistency in their views. Their arguments are constantly contradicting: "Growth is holding up, which means the Fed must hike interest rates even more, which is bad for stocks." "Actually, growth is weak, and the Fed has already hiked interest rates too much, which is bad for the economy and stocks."

So.

As Derek Thompson said -

The US has the fastest growth rate of any G7 country. And the US has the lowest annual inflation of any G7 country. And Americans hate it!

The Economic Reality

Things are okay. Things are never really great, but they are okay. There is of course still the individual experience - 1 in 5 Americans are spending over $1,000 a month on car payments, which likely feels very bad - but all of this could be so much worse.

I don’t know. I feel like I end up back here in every newsletter, just gesticulating into the space around me and trying to do a mass psychological analysis on the populace, which is simply silly, but is the basis of Economics. But there is one thing I keep circling back to -

• People are so anti-establishment that they forget to stand for something.

There’s an article in The Guardian about Poly Styrene - how her ‘inspiring sensitivity should be the true legacy of punk’. The author writes:

Poly wasn’t someone who speculated on society’s downfall from the sidelines. She lived and embodied these modern-day tensions: in the space between black and white, using her voice in a wild and noisy way, she occupied a very real outsider identity. This knife-edge existence, paired with such a sharp wit and vision, meant that she saw through the cracks in society.

We have a lot of people on the sidelines. Which reminds me of Toni Morrison in The Source of Self-Regard-

Fascism talks ideology, but it is really just marketing—marketing for power. It is recognizable by its need to purge, by the strategies it uses to purge, and by its terror of truly democratic agendas. It is recognizable by its determination to convert all public services to private entrepreneurship, all nonprofit organizations to profit-making ones—so that the narrow but protective chasm between governance and business disappears. It changes citizens into taxpayers—so individuals become angry at even the notion of the public good. It changes neighbors into consumers—so the measure of our value as humans is not our humanity or our compassion or our generosity but what we own. It changes parenting into panicking—so that we vote against the interests of our own children; against their health care, their education, their safety from weapons. And in effecting these changes it produces the perfect capitalist, one who is willing to kill a human being for a product (a pair of sneakers, a jacket, a car) or kill generations for control of products (oil, drugs, fruit, gold).

As Noahpinion once said “the thing Americans want most is for other Americans not to have stuff.” Like there are things like the UPS strike that are deserving of the same wrath these people show to economic metrics (and each other) - imagine if we were collectively like “labor unions and workers rights” rather than “im being wronged by everyone”.

I think there are three main things that are driving some of the cultural weirdness -

1. Constant availability but ever-present loss

2. Excessive optionality but feeling as there are no choice

3. Desire for a sermon but no community

Constant availability but ever-present loss

As James Palmer said

One thing I'm not certain older entertainment people have adjusted to is that legacy movies like Indiana Jones and Star Wars are more available and less special. when I was a kid an Indiana Jones movie being *on TV* was noteworthy enough you made sure to watch it.

Things are always There. When things are always there, it reduces some of the value, but it’s also less special. Any time you want to watch something, you can. There is no effort.

But there is also loss. Because of the content cycle, we just move through shows and media QUICKLY. People get bored. Or, as Vulture wrote about, it gets too expensive. As Ethan Mollick said about Disney+ removing a movie for cost cutting reasons-

Everything the early open internet hackers were worried about turned out to be true If you can’t have your own local copy of something, it can be disappeared. Any corporate online platform can become a walled garden overnight & your content taken away. Only Wikipedia will endure.

There is a constant thread of instability and fear in most things we interact with, especially beyond just TV shows. Will Twitter die? Will TikTok? Will there be another pandemic? We have so many things to choose from, but there is no promise our choice will stay with us, and that creates a weird cognitive dissonance.

Excessive optionality but feeling as there are no choice

But then we have a LOT to choose from. Simoj said -

Anyone else experience losing 95% of their interest in TV and movies? At some point in my thirties all talk of xyz being a great show just became empty background noise Idk, I’m not proud of it. I think it’s probably bad, and definitely not universal, but maybe I’m not alone?

Some of this is the repetition of stories, aging, other time demands, but I do think that there is a LOT out there, but nothing sits right. All the stories are commercialized, in service of brands rather than culture. The New Yorker published a piece about the Barbie Movie and Mattel ripping all it’s IP to the big screen and there were SO MANY good quotes

• A nostalgia play like “Hot Wheels” is seen as a safer bet than an original concept.

• The mandate for audience recognition has pushed artists to take increasingly desperate measures—including scrounging up plotlines from popular snacks

• “Our top priority is to make really good movies—movies that matter, and that make a cultural footprint. Our second priority is to make sure that we do no disservice to the brands.”

What we consume is BRANDED. What we interact with are stories that have been told, and they demand consumption -

“Gerwig’s “Barbie,” for all its gentle mockery of Mattel, has already paid dividends for the company. A fifty-dollar doll resembling Robbie as she appears in the film, unveiled in June, has sold out; so has a seventy-five-dollar model of Stereotypical Barbie’s pink Corvette. Brand collaborations have yielded a glut of Barbie-themed offerings, from candles to luggage and frozen yogurt.”

As Toby wrote in Life After Lifestyle - “all culture is made in service of for-profit brands, at every scale and size”

Desire for a sermon but no community

And when all we interact with is branded stuff, it gets lonely. The content is not good. Money spend doesn’t matter - Amazon’s $250 million show came in behind Barbecue Showdown. People aren’t really getting what they need from the content that they consume.

So people turn to other forms of entertainment - like the ~50% of Vanguard investors actively managing their own money. This is largely a function of risk appetite - of which there seems to be plenty of - and a lot of people treat the CNBC hosts or different financial podcasts as some sort of sermon.

But we still don’t really have community. Excessive individualism. All for me, none for thee. There’s a really fun paper called Praying for Rain - where “prayers for rain only "work" in places where the probability of rain is increasing in the length of the dry spell ---> so these places have more religious belief.”

When it hasn’t rained in a long time, it’s more likely to rain, therefore… prayers for rain after a long time with no rain can translate to the prayers “working”. But the root of that is belief, time, trust - and community.

The In-Between

I biked 100 miles this weekend. It was hard. And one thing I kept telling myself was “focus on the process, not the result.” The 100 mile was the end state, but not really. It mattered a lot more how I got there, versus dragging myself to the end. It’s more fun to be present during than to be thinking to when it’s done.

There’s a scene from Before Sunrise & Before Sunset where one of the characters says -

“I believe if there's any kind of God it wouldn't be in any of us, not you or me but just this little space in between. If there's any kind of magic in this world it must be in the attempt of understanding someone, sharing something. I know, it's almost impossible to succeed, but who cares really? The answer must be in the attempt.”

The answer must be in the attempt. We get caught in the stuff that happens at the end, that we so often forget to simply exist. And maybe availability, optionality, sermons, etc could all be solved if we were just more present to the moment. More reflective. More there for one another.

This from Terry Davis is marvelous-

“The bird is okay even though he doesn’t understand the world.” And of course, a poem:

Thanks for reading.

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