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No taxpayer funds were used in the writing of this mailbag

Matthew Yglesias

21 - 27 minutes

I don’t want to say that I favor the world becoming embroiled in bank failures and financial crises, but it does kind of make me feel young again. Beyond that, I think a lot of prominent politics Substacks have taken on a fair amount of unhedged culture war risk. Part of Slow Boring’s business model is that we’re able to discuss bank regulation and competition policy and welfare state design alongside the cultural controversies of the Trump era. This mailbag’s got a little bit of everything.

But first some positivity: Seniors are getting cheaper prescription drugs, we’re seeing important breakthroughs in donkey science (okay, maybe not so important… but interesting) and maybe on superconducting. I know there is some anxiety over a Chinese diplomatic achievement, but I have to think a Saudi-Iranian rapprochement is good for the world. Ratings for the Oscars went up 12% and a good movie that a lot of people actually saw won — good news for culture!

Shoshanna O’Keefe: Sorry if you've already covered this — I bet you have. But, as a contrarian, what are your arguments *in favor of* daylight savings?

I will say my most contrarian view of all is that I don’t personally have any strong preference about the time. Nothing is stopping you or anyone else from changing when you go to bed or when you set your alarm clock, and I honestly don’t care whether it’s light out or night.

But the strongest objective case for DST that I’m aware of is it reduces crime because light deters crime and people who commit crimes are not generally early risers.

Joe Byrnes: Am I right to sense that the media feels completely comfortably lying about whatever bullshit DeSantis is up to? For instance, with the recent AP course on black history getting pulled back and modified, I listed to a very long NPR piece about how DeSantis doesn't want students to learn that Black people exist and that slavery was bad. That's an absolutely insane take that was treated as straight reporting. I get that he sucks but shouldn't it be the voters job to decide? I feel journalists shouldn't exaggerate so much to make him look bad.

I try to tune out most media coverage of Ron DeSantis because it’s overwhelmingly focused on things that I don’t think are interesting or important — I know there was a controversy about AP tests but I sincerely didn’t read any of the stories and have no idea what the facts are.

What I do hear frequently (and think is correct) is that a lot of people on the left are afraid of DeSantis, and I personally am one of the people who is afraid of DeSantis. During his career as a House member, he voted multiple times to privatize Medicare while cutting benefits, voiced support for privatizing Social Security, and backed huge across-the-board cuts in government spending on programs for poor people. He voted for the 2018 bank deregulation that contributed to the Silicon Valley Bank fiasco, and he voted for a much more radical bank deregulation bill that mercifully didn’t pass the Senate. He voted to roll back the Affordable Care Act’s regulatory protections for people with pre-existing conditions and to eliminate the ACA marketplaces that make it possible for us to run Slow Boring. He voted for savage cuts to Medicaid and has followed through on those anti-Medicaid views as governor of Florida. This all seems genuinely very bad and also makes me understand why rich plutocrats who hate the welfare state love DeSantis — not only is he a fanatical Paul Ryan-style believer in shredding the social safety net, but unlike Ryan, he’s very skilled at baiting the media into obsessively covering basically insignificant disputes instead of his ideas about what to do with the government’s biggest programs. In that way he reminds me of George W. Bush, a much more skilled politician (and much less of an asshole) than Trump, who nonetheless on a practical level managed to enact more bad policies.

To give a sort of zoomed-out take, I think one big problem in American life is that partisanship is deeply stigmatized, but that doesn’t stop people from being partisan.

So there’s an unwillingness to just say “look, Ron DeSantis is a guy who joined the Republican Party at a young age and has dedicated his entire life to trying to advance core Republican Party policy goals, and to me, a Democrat, that is terrible.” So instead, people get hyper-focused on the controversy of the day.

The RNC likes to pretend to be upset that Joe Biden spends too much weekend time in Delaware, when obviously their actual objection is that he favors legal abortion and redistributive taxation, whereas Republicans think abortion should be illegal and rich people are overtaxed. That’s the problem with DeSantis! I look forward to him laying out his views on more issues of federal public policy, and at that point I’ll probably disagree with him. But it’s not a school board election.

Nelson Barnes: I have read that you believe more nuclear power plants would be good. Aren't you concerned about the nuclear waste that is piling up?

I’m not. Particulate air pollution kills tens of thousands of Americans per year, a bit more than a thousand per year die of cold exposure, and several hundred overheat to death per year. Nuclear waste, by contrast, is responsible for zero deaths per year. Increasing the volume of zero-emission energy would be very good.

Adam K: There’s been a lot of chatter from various folks on CNBC and on the right that the government allowing JPMorgan Chase to be sued (and pay hundreds of millions of dollars) for the sins of WaMu and Bear Stearns has discouraged banks today from volunteering to take over large failing banks.

Chase bought both of those banks on the brink of collapse *at the prompting of the federal government*, and it does seem like the risk of being sued would be pretty discouraging for banks reviewing options today! What are your thoughts? Do you agree? Or is there some missing element here.

J.P. Morgan Chase executives have clearly been putting this idea out there and even though I think they are overstating the “at the prompting of the federal government” aspect of this, they are pointing to a genuinely underrated issue here. In practice, we want failed banks to be bought quickly, but that’s incompatible with the kind of due diligence that a prudent general counsel would tell a bank CEO to exercise.

For a bit of background, the legal principle in the United States is that if Company A buys Company X, it not only gets all of Company X’s assets, but it also inherits legal responsibility for any of Company X’s crimes. That broadly makes sense, since if that wasn’t the rule, Company X could get rich doing crimes and then evade culpability by swiftly selling itself to Company A. When the lawyers went spelunking in the wreckage of the 2007 financial crisis, they found a bunch of mortgage fraud and other wrongdoing by banks that failed during the crisis, and then sued those banks’ new owners. J.P. Morgan, in particular, got hit with huge settlements for the sins of banks it acquired.

This seemed to make sense to most people at the time since it really is a straightforward application of a totally reasonable principle. And I think people following the cases generally thought that despite the eye-popping numbers involved, there was actually quite a bit less than met the eye to these settlements.

But here’s the problem.

Silicon Valley Bank is taken into receivership on Friday. The most convenient solution for everyone would be to announce on Sunday that SVB has a new owner, everyone’s deposits will be taken care of, and the government didn’t really need to do anything other than the paperwork. But for that to happen, the bids need to come in fast. These banks have a lot of smart employees who can examine SVB’s books pretty quickly and decide if the bank is worth anything. But they can’t complete a thorough investigation of potential crimes within 48 hours, especially because you can’t just phone up the executives and say “hey, did you do any crimes?”

Were there any crimes? I have no idea.

But that’s the point. Having established the precedent that the acquiring bank could be held liable for the results of an investigation that might take years to unfold really deters anyone from making a snap bid on the bank.

This strikes me as something that should be addressed legislatively because it threatens to open up a big hole in America’s bank regulation system. The FDIC’s ability to quickly flip failed banks is really a very important part of the process. You’d need to think it through with some smart attorneys to make sure you’re not opening up a weird loophole, but in principle, creating some kind of “failed bank emergency acquisition exigency circumstances” rule whereby the legal liability does not convey with the dead bank’s assets seems like a good idea.

Max Power: I saw this long piece in the NYT last weekend on Thomas Massie as the "next big thing" in Republican politics. Does this strike you as potentially real or journalists conjuring up a story because it seems interesting to them?

The latter.

Rishabh Kapoor: What’s your take on the Biden admin approving the Willow project in Alaska? I’m receptive to the argument that we need to address current energy scarcity and that domestic oil production is cleaner than imports. However, the estimated emissions from the project do seem large (9.2 metric tons of CO2/year) in proportion to current total domestic emissions. Is short term energy security worth the tradeoff here?

This is a specific example of the general issue I wrote about here.

My starting point for thinking about this is that calculating the emissions impact in terms of the gross emissions associated with the Willow project is clearly a mistake. You need to assess this in some kind of global equilibrium. Willow will lead global oil prices to be cheaper by X which will lead global oil consumption to be higher by Y which will lead emissions to be up by Z. What’s Z? I don’t know, but it’s obviously smaller than the gross amount of oil pulled out of the ground by Willow. This then becomes an example of some other themes I’ve written about, like how it would be really useful for policymakers and activists to have rigorous, accurate modeling of the emissions impact of the policies they favor. But the way the environmental movement works, they’ve already decided that their policy preference is to block fossil fuel projects, so they do pure advocacy messaging around each individual project rather than trying to actually assess these things.

Regardless of the details, though, the key point is that under any theory of the case, the way Willow would increase emissions is by making prices lower. Alternatively, the way that blocking Willow would help on climate is by making prices higher.

That’s important because every time there’s an energy price spike and Republicans complain that environmentalists are too anti-drilling, the environmentalists flip and argue that domestic drilling has minimal impact on global oil prices.

But if the global price impact is minimal, then the global emissions impact is also minimal. What’s not minimal is the local economic impact. It makes a fair amount of difference to the U.S. government whether the drilling happens in the United States or in Saudi Arabia, and it makes a huge difference to the people of Alaska. So I think the Biden administration is right to take seriously the fact that Rep. Mary Peltola and Lisa Murkowski want this to happen, and that labor unions and indigenous communities in Alaska support it.

If you want to take the political hit for reducing emissions by increasing the price of fossil fuels, what you should do is advocate for a carbon tax. For any given increment of emissions reduction, a carbon tax would achieve that reduction at a dramatically lower economic cost. Conversely, for any given willingness to pay, a carbon tax would achieve dramatically more emissions reductions. Climate groups have largely walked away from carbon price advocacy because they don’t think it’s politically viable to argue for higher energy prices. That’s a plausible political calculation in my opinion, but advocating against Willow is just the same thing. If the best defense you can make for your advocacy is “it actually won’t raise prices,” that’s an admission that it’s not a big deal for climate change.

It’s also important to consider these things across the long term.

A bipartisan consensus to “keep it in the ground” and halt all American fossil fuel exploration would obviously have a significant long-term impact on emissions as well as on the American economy. But a policy framework of “fossil fuel projects only get approved when there’s a Republican in the White House” would have a much smaller emissions impact since Republicans are likely to win about half the time. Note that there is no offshore drilling off the coast of Florida not because Democrats won’t allow it, but because environmentalists have convinced Florida Republicans that offshore drilling would be bad for the state. In Florida, unlike in Alaska, there’s a consensus that preserving the local environmental amenities is more economically significant than creating drilling jobs. That kind of work actually keeps oil in the ground. Leaning on Biden to do politically unsustainable stuff is, at best, a list-building tactic and not a serious policy.

Douglas Thornburg: I'm curious about your views on George Packer’s recent Atlantic article A View of American History That Leads to One Conclusion? In it he discusses the a turn to fatalism and the view that while a more complete understanding of history and culture is worthy it has become something that offers no vision or hope for how the country moves forward. I believe that finding a widely held national vision is essential for moving America forward.

Full disclosure: Packer’s sister is married to my father, which I suppose makes him my “step uncle,” but I don’t think we’ve ever actually met in person.

I am of two minds about the essay. Here are some claims it makes that I agree with:

    Jefferson Cowie writes good books, but they’re sort of pessimistic downers (I have not read “Freedom’s Dominion,” but Packer’s characterization of it is consistent with other Cowie books that I have read).

    Timothy Shenk is a historian who has insightful takes on contemporary American politics (I have not read “Realigners,” but Packer’s characterization of it is consistent with Shenk essays that I have read), as well as a more optimistic attitude than Cowie.

    Richard Rorty’s book, “Achieving Our Country,” is very good (I am a big Rorty fan and have read all his books, both the public intellectual ones and the more technical philosophy ones).

    Spreading bad vibes is a bad political strategy (as I argued in “Why Are Young Liberals So Depressed”), and Rorty would not approve.

    Jedediah Purdy has interesting ideas but they don’t seem very practical. 

But the framing of the piece is around the fact that when Packer was in school, “American history was taught as a series of triumphs over wrongs that belonged to the past,” but today “American culture is consumed with the most terrible subjects of the country’s history: slavery, Native American removal, continental conquest, the betrayal of Reconstruction, Jim Crow, colonialism, militarism.”

I agree with Packer that to the extent this is true, it’s bad. But is it true? I’m not sure he has the data or even the kind of data you’d need to make the claim. After all, dwelling on the injustices of the past isn’t exactly incompatible with teaching a story of triumphs over wrongs. If you read “Profiles in Courage” or other midcentury works of consensus history, they treat the Civil War as a huge tragedy and Reconstruction as a farcical mistake in part because they are invested in downplaying the evils of slavery. A more contemporary historiography that dwells on how bad enslavement was turns the Civil War into a brutal but ennobling battle for freedom and liberation. The question of whether we’re painting a fatalistic or heroic account of the past is distinct from the question of whether we’re talking about bad stuff. The 1921 pogrom against the Black residents of Tulsa is the kind of thing we hear more about today than we did when I was a kid. But if you’re a person of an optimistic inclination, that just underscores that things really are better today than they were 100 years ago.

In particular, Packer cites the 1619 Project as an example of the kind of anti-Rortian project he deplores. After years of debate and chewing over it, that’s certainly what it stands for in the discourse.

But when I first clicked over to Nikole Hannah-Jones’ lead essay, I read it as a very Rortian exercise — an educated, intelligent, socially-conscious Black woman trying to wrestle with her father’s patriotism by forging a narrative of American history that put Black people at the center of a heroic struggle for freedom and democracy. It attracted a lot of criticism from people who disputed some of her factual claims, but as Packer quotes Rorty, “stories about what a nation has been and should try to be are not attempts at accurate representation, but rather attempts to forge a moral identity” — in this case, an optimistic and inclusive moral identity that centers progress and liberation. Exactly what Packer, rightly I think, says we ought to have more of in our culture.

Trace: A few weeks ago you shared Jamie Reed's article on Twitter and cited it in the SB article about progressives needing to engage with the questions on trans kids, and then (credit where credit is due) when further reporting came out citing parents of the clinic’s clients that called her version of the story into question, you also shared that. Other writers in the same circle that also cited Reed's article- like Chait and Singal- have spent the last few weeks doubling down on defending her and attacking her critics, but you seem to have moved on and avoided getting dragged into those arguments. Have your views of Reed and her allegations changed since her article was first published? Where do you fall now in terms of seeing her as a credible whistleblower?

I’ve been trying not to get sucked into this because I don’t have any original reporting to offer, and I don’t think Reed’s account was the centerpiece of any of my commentary on this topic. My general philosophy is that when a person makes allegations in a sworn affidavit, that creates a defeasible assumption that the person is telling the truth. But then the St. Louis Post-Dispatch’s reporting that involved talking to people who are happy with the clinic’s approach seems like a pretty natural countermove.

As I read their story, it doesn’t directly contradict many of Reed’s specific factual claims. Here’s a bit of the Post-Dispatch story:

    The whistleblower report also claimed Lewis and Garwood lied about not doing surgeries on minors, saying the center “regularly refers minors for gender transition surgery.” In an April interview, Lewis said: “Surgery is not offered to anyone under 18.”

It seems like Reed is saying the clinic refers minors for surgery while Lewis is saying the clinic doesn’t perform surgery on minors. Those could both be true. And the fact that Lewis’ response isn’t “no that’s not true, we never refer minors for surgery” suggests to me that they probably do refer minors for gender transition surgery. Do they do it “regularly”? That’s just not a very precise term. It’s possible for a person to paint a very misleading portrait of a situation while still getting the details correct. In a society with healthy epistemic institutions, we do journalism and look into these kinds of claims and counterclaims without it becoming a huge war of position in which everyone has decided they know the answers in advance.

Alex Greenberg: In your view, was the Treasury/FRB/FDIC wrong to step in and exercise Systemic Risk Exception for SVB? Is this action an industry-specific bail out of a ‘bank-run by idiots’ (h/t Matt Levine) or something that FIRREA agencies should have on the table when non-GSIB banks run into trouble?

The reason I haven’t done a “they did the right thing!” or a “they fucked up!” column is that I think this was a really difficult call that involved rapid-fire decision-making under uncertain conditions.

Carl Johnson: What would it take for you to do one of those fake out columns where it turns out the whole thing was written by GPT-4 the whole time… or was it?

GPT-4 seems well-suited to the mailbag format, so I gave Bing Chat the next question.

Myrna Loy’s Lazy Twin: The federal government is now reportedly investigating insider trading at Silicon Vally Bank. We keep having these insider trading scandals where it doesn’t quite meet the legal requirements for insider trading. I’ve seen this blamed on our insider trading law dating back to the 1930’s. Is the age of the law really a significant barrier to convicting people of insider trading or are prosecutors unwilling or unable to bring these cases? Would updating the insider trading laws and convicting more people of insider trading reduce the sentiment that people high up in institutions are making money via legally and ethically questionable methods?

Hello, this is Bing. That’s a very interesting question. According to the web search results, insider trading law in the United States has evolved from state common law rules in the nineteenth century to federal statutory regime in the early 1930s.1 However, the current regime’s approach is different from either of the two common law rules that existed before1. The Supreme Court has established a rule that insiders must either disclose their information or abstain from trading.2 However, there are still some ambiguities and loopholes in the law that make it difficult to prosecute insider trading cases effectively.3 Some experts have suggested that Congress should pass a clear and comprehensive legislation to define and prohibit insider trading.3 Whether this would reduce the public sentiment that insiders are making money unfairly is hard to say, as it may depend on other factors such as enforcement, transparency and ethics. What do you think?

Miyero Vasquez: Do you ever write poetry? Can we see? If not can you make one up?

I asked Bing Chat to write a poem about tax policy:

Tax policy is a complex art

That shapes the nation's wealth and heart

It sets the rules for who must pay

And how much they must give away

Tax policy can spur or slow

The economic growth and flow

It can reward or penalize

The choices that we make and prize

Tax policy reflects our goals

Our values and our social roles

It can promote equality

Or foster opportunity

Tax policy is not a game

It has a power and a name

It shapes our lives in many ways

And we should care how it is made.

That’s not “a good poem,” but it’s pretty impressive!