Maine mailbag. By Matthew Yglesias

www.slowboring.com

24 - 30 minutes

We’ve been enjoying the Blue Hill peninsula — it’s been fantastic to have the extended family together, we’ve eaten plenty of lobster rolls, and through a coincidence of vacation timing I even met Nate Silver for the first time. Maine! It’s great! But I’ll also be glad to have the school year back in session next week and life returning to normal.

In other news, this writeup emphasizes the negative, but you can see in the data that perceptions of the economy are improving. You can also see that inflation in tradable goods has really fallen dramatically. Decoupling from China seems to be actually happening. Phonics legislation is taking the country by storm. A great look at housing reform in Maine generally and the specific city of Auburn in particular. The construction of more and cheaper batteries is proving its worth this summer in Texas in terms of improved reliability of the electric grid — the more affordable batteries become, the more room we have to run with adding renewables. I always love a good ancient DNA breakthrough.

There’s a huge surge in employment opportunities for young people without a college degree, if they’re willing to sign up for training in the trades. Fresh evidence that it’s good when low-income people have more money.

Now let’s do some questions.

Zach Reuss: In a world of declining fertility rates and potentially falling global populations. Should we really expect the stock market to continue to return 6-7% a year?

If I'm not planning to retire until 2060 should I be making different financial decisions?

I don’t know what decisions you’re making now so I can’t really give you advice, but I agree that aggregate stock market returns are likely to be lower in a world of slower population growth. On the other hand, maybe by 2060 the world will be populated by trillions of digital people and our AI overlords will allow a dwindling number of humans to live out a lovely retirement?

Matt: Do you think the growth of the private equity industry is a net positive or net negative for the US?

Are there any reforms you would propose for regulation of the private equity industry?

Private equity is a mixed bag.

On one level, in a big rich country like ours, the private equity industry is playing an important role. There’s a lot of existing capital and existing companies around and while they have their virtues (or they’d have gone out of business already), they aren’t necessarily all being run very well. It’s good to have pools of eagle-eyed investors out there looking for opportunities to optimize these things. A different model that sounds better but is actually worse is what you have in Italy, where small- to medium-sized businesses tend to remain as family firms across multiple generations. These companies tend to be poorly run because instead of professional management, you get something like “the business is run by the nephew of the grandson of the founder.” This has made Italian companies slower to incorporate new technology, slower to update their business processes, lower in productivity, and ultimately, they pay lower wages.

The problem is that sometimes “optimizing an old business” doesn’t mean “let’s build a website,” it means “let’s default on the ethical commitments of the founders.”

For example, private equity firms have figured out that there are lots of opportunities to buy nursing homes and cut costs by reducing staffing levels. Any time you cut costs, you run the risk of degrading the quality of the product. And, indeed, in this case, the death rate among patients goes up a lot. But it turns out that killing your patients early with understaffing doesn’t hurt revenue very much. That’s bad. Another example that we’ve seen a lot of recently is private equity companies buying local newspapers that are profitable but in decline and then sharply cutting costs without meaningfully increasing the pace of decline. That generates returns for the private equity company and also capital to be redeployed more efficiently to growing economic sectors like gambling.

In both of those cases, one might reasonably think there are problems here. Local news may be shrinking while legal slot machines are growing, but there is a social value to local journalism that slot machines don’t have. By the same token, while making nursing home operations more efficient sounds like a pretty good idea, doing so in a way that kills the patients is bad.

One thing to say about this is that, as I mentioned last week, I do think there’s a role for the social concept of greed. Imagine this scenario playing out at a party:

    “So what do you do?”

    “I’m in private equity.”

    “I’ve never really understood what that means.”

    “Well, my firm invests in small- to medium-sized companies — usually ones whose founders have moved on or want to retire — and then we try to bring in the best professional management techniques.”

    “I think the nursing home where my sister-in-law works got bought out like that.”

    “Great example, yeah, we find that the typical nursing home is overstaffed from a profit maximization standpoint so we cut back on the number of actual nurses. More patients die, but we don’t have trouble filling the beds — that’s business!”

I think probably the private equity guy would not actually say that, because if he put it that clearly, the other guy would think he’s an asshole. Which I would say is an appropriate reaction. The profit motive and all that is fine, but at the margin it’s good for people to have incentives to try to find ways to make money that are actually beneficial and don’t just evolve exploiting other people’s short-sightedness.

But I think the important thing about all of this is that it doesn’t so much call for regulation of private equity as for regulation of nursing homes. Or in the case of local news, maybe it calls for subsidies. Or for stricter rules about gambling. On balance, I think it’s good to have a private equity industry. And in particular, I think it’s bad when people demonize a very normal activity like “buying houses and renting them to people” just because it’s being done by private equity companies. But you do need to regulate actual business sectors in appropriate ways, or else greedy investors will sweep in and do bad things.

Seneca Plutarchus: Chicago budgets $6,080 per resident ($16 billion budget, 2.6 million residents), New York City's figure is $12,635 ($107 billion / 8.4 million) and San Francisco's is $29,792 ($14.6 billion / 851,000). How do you figure metrics for spending effectiveness — and are there any international comparisons possible?

Common sense says that some local governments are spending money more wisely than others, but unfortunately it’s extremely difficult to do comparisons, not just internationally but domestically.

Just looking at those three entities, my guess is that the reason San Francisco’s spending is so incredibly high is that it’s a consolidated city/county entity whereas Chicago is subordinate to Cook County. New York City is really unusual in that it encompasses five counties (“boroughs”), but county government in New York has very few functions. But even beyond the city/county divide, there are tons of complications here. I saw someone tweeting once about how Baltimore spends much more money on cops than on schools, but this widespread misimpression came about because Baltimore Public Schools is a separate fiscal entity from the City of Baltimore (which, like San Francisco but unlike Chicago, is also a county).

Over and above those complications, you need to watch out for double-counting.

In Los Angeles County, the LA County Fire Department performs certain functions county-wide. There are also lots of cities in LA County that have their own fire departments. But there are also incorporated cities that contract with the county to provide fire services. So if you naively try to count up each locality’s fire expenditure and then add it to the county-level fire spending, you’ll end up counting twice. Now clearly a person who is aware of these nuances can try to find a way to work through them. But the upshot is that it’s time-consuming to generate true apples-to-apples comparisons that would let us really understand who is spending their money effectively.

I think the difficulty of clearly demonstrating who is doing better and who is doing worse weakens the incentives to do a good job. So my best guess is that if we really looked under the hood of local government, we would find incredible amounts of waste and graft.

John B: I was recently listening to Jane Coaston's interview of Ben Domenech, and the concept of Barstool Conservatives came up. I was wondering what you thought of this phenomenon. Is it anything more than just slightly more obnoxious bro-y libertarianism? Is this a group that progressives could potentially persuade post-Dobbs and post-book banning, etc.?

The specific reference here, I believe, is to Dave Portnoy’s negative reaction to the Dobbs decision. But the concept is similar to what Andrew Sullivan used to call “South Park conservatives,” and I do think it’s distinct from libertarianism.

The key thing about libertarianism is that it’s actually a very rigorous ideology that asks you to bite a lot of bullets, while I think the core value of Barstool Conservatism is a pretty literal desire to just be left alone and enjoy the status quo. Which is to say that if you lived in a libertarian society, a Barstool Conservative might well be a libertarian — he certainly wouldn’t jump on the bandwagon of any big new crusade. But in our actually existing society, I don’t think the Barstool Conservative particularly wants to take financial responsibility for mom and dad in a world without Social Security and Medicare any more than he wants to be coerced into a shotgun marriage if his girlfriend gets knocked up. He wants to have a beer with the guys, laugh at jokes that he thinks are funny, and not be told he needs to worry a lot about Jesus or social justice or the impact of climate change on Nigeria.

In general, I would say this kind of guy plays as a member of the conservative coalition mostly because for the past 15 years or so, the left has been on the march.

In recent years, if someone has been telling you that you need to change how you’re living your life — use different words, use a different kind of stove — that person has probably been a progressive, so if you don’t like change, you’re a conservative. If conservatives gained more social and political power and started trying to implement their sweeping vision of social change in which everyone is supposed to revert to 1950s ideas about sex, gender roles, and religion, I think you’d see a big switch. By the same token, I think a sincere effort to get Americans to stop buying cheap manufactured goods from Asia and accept much higher consumer prices for the sake of autarky would generate a lot of Barstool Backlash. But as long as conservatives seem like they’re mostly talk, the difference between a small-c conservative outlook and conservative movement politics is muted.

Evan Bear: What I really want to know is what's the deal with that woman who accused Matt of making her wash his dirty dishes in the office sink (or whatever the story was)? Was it made up? Some sort of misunderstanding? I don't seriously expect him to address this, of course.

Okay, here goes the story.

Vox Media had this office in D.C. that had a whole bunch of people working in it scattered from across the company. We also had a shared kitchen that had snacks and coffee and mugs and plates and bowls and a dishwasher. There were basic commonsense rules like “put your plates in the dishwasher,” “run the dishwasher when it’s full,” “make more coffee if the coffee runs out,” and so forth. But lots of edge cases would arise, like “what if you have a dirty bowl and the dishwasher is also running?” I think you were supposed to keep your bowl at your desk, and then put it in the dishwasher when the space became available. But some people broke that rule and left dirty dishes in the sink. Other people let bowls pile up at their desks.

There would be spills of various kinds in the kitchen and sometimes the microwave would get dirty and you’d have all the other problems that arise with a facility that’s shared by dozens of people. Anyone who’s ever lived with roommates or shared a big bunk at sleepaway camp can broadly picture it. The whole thing tended to generate a lot of intra-office emails and Slack messages, with various people exhorting each other to do a better job of following the rules.

At one point during one of these dust-ups, I observed to someone else that we could avoid all this fighting if the company hired someone to clean the kitchen as their job, paired with the further observation that the hourly wage of such a person would likely be lower than the hourly wage of the average Vox Media employee.

So not only would we get a cleaner kitchen, but we’d have a better allocation of resources relative to a scenario in which everyone got way more diligent at cleaning the office. This had nothing to do with me personally not wanting to wash my dishes (I almost always went out to lunch and really just used a coffee mug) and everything to do with my overall passion in life for finding win-win, positive-sum solutions to social problems. The company did, in fact, hire someone to clean the kitchen, the kitchen got much cleaner, and she became a beloved member of the team for the rest of my duration with the company — I left during Covid and don’t know what’s happened with return to the office or anything since then. Then sometime after I left, I said something a little sharp on Twitter about how digital media union organizing has not been the boon for free speech that a labor idealist might hope for.

Various Vox Media people got mad at me over that, and one of them who’d apparently overheard my conversation about the kitchen either misunderstood what she’d heard or chose to lie about its contents for whatever reason. You’d have to ask her.

But on the larger point, I was obviously correct. It is difficult to keep shared spaces clean! If you have a small group, there is probably no better alternative than to just ride everyone to be conscientious. But as your group gets larger and larger, the coordination issues get harder and the cost of just hiring someone to handle the job gets lower. That’s why in offices all across America there are custodial staffers who clean the floors and the bathrooms, and the same logic applies to kitchens.

City of Trees: What's your general take on cars? You obviously believe that any cars on public streets should abide by all applicable laws (such as proper license plate display), but do you think it's good or bad or somewhere in between for the automobile to be the dominant mode of transportation? Furthermore, you also support congestion pricing as a way to more efficiently allocate traffic flow, but how would you determine how much transportation corridor space should be allocated to motorist vs. non-motorist use?

My personal opinion is that the automobile is a very useful technology, which is why they are widely owned all across the world once people are rich enough to afford them, and I think internet discourse around this tends to reflect brain poisoning.

That being said, the United States of America has a large amount of public policy that is dedicated to the idea that there should never be parking jams or parking scarcity and also that driving and parking should both be free and also that the pollution externalities (both from tailpipes and from tire particulates) associated with driving should be unpriced.

That, to me, is bad.

If I got to be the dictator of Washington, D.C., there would be much more housing. And while there wouldn’t necessarily be fewer parking spaces or roads, there would be less parking and road space per person than there is now. We would address that with market allocation of road space and parking, with the result that while a person in a hurry could always hop in a car (whether personally owned or an Uber) and go where he wants, it might be expensive depending on the time of day and the destination. Under those circumstances, a larger share of trips would be done through active modes or on transit — and the higher ridership would support higher transit frequency.

Given the greater expense of using and storing a car and the improved frequency of transit, a larger share of the population would choose to be carless (you’d also save on insurance this way), which would further bolster transit ridership. My best guess is that in many cases a technical analysis would show that under these circumstances creating more dedicated bus lanes would improve aggregate mobility, but you’d have to look at it.

So that would definitely be a world of “less cars.” But I do think American urbanists are sometimes excessively influenced by visits to pre-automobile European cities. These cities can be really nice places, and the trad accounts who post pictures of them aren’t wrong to point out that they are nice. But you can’t un-invent cars. You have to build modern cities that use modern technology without being enslaved to cars. It’s probably more informative to look at Asian cities — Hong Kong, Seoul, Singapore, Tokyo — for guidance on what that can look like.

Jasper_in_Beijing: There was a loud kerfuffle this week about NIMBY opposition to a homeless shelter in a Bay Area suburb called Millbrae. I bet you heard about it. Like a lot of your readers, I strongly favor a robust right to build system with respect to housing and property rights (“If you own land and the housing is safe, you get to build it”), but I must confess I do have some sympathy for the folks who showed up to protest the homeless facility in their town. No doubt a lot of them are hardened NIMBYs who oppose any and all efforts to bring in housing abundance. But maybe not all of them. Because the thing is, people ascertain a difference between housing in general and housing specifically targeting unhoused persons, because the latter are associated with crime, drug use, mental illness, unsanitary conditions, and so forth. I believe if we could ever adopt a truly Yglesian vision of housing abundance, the need for bespoke homeless facilities would fade, and we'd see far fewer such controversies. Does A) this calculus seem correct, and B) is it wrong in your view to support housing abundance but simultaneously have strong reservations about the building of new homeless shelters next door? (I'd personally prefer to get as much housing abundance as possible, and just give people money for rent).

The homeless shelter is a weird case, because I do think we want to say there would be dramatically less need for homeless shelters if we had more housing abundance. I’d also say that while I find the concern about living near a homeless shelter understandable, I think it’s probably also mostly wrong — I used to live right by a shelter and it was fine.

The tougher case is something like a halfway house for ex-cons. At a different time in my life, I lived near a place like that and it was honestly not all that fine. A guy with an old beef with one of the guys in the halfway house came around and tried to kill him, killed an innocent bystander instead, and then later came back and the intended victim of the first shooting killed the would-be killer. At the same time, this is a true “not in MY backyard” situation — I don’t think every single felon should be locked in prison forever, and it’s clearly better for people who get out of prison to have a place to live than to be sleeping on the streets. And of course if the ex-cons were sleeping on the streets, you wouldn’t want that happening in your backyard either. I would just all things considered prefer the halfway house to be somewhere else and I am glad to no longer live there.

But we should ask ourselves what is the public policy question here.

The term of art that’s relevant here is locally undesirable land use (LULU). A lot of NIMBY vs. YIMBY Twitter consists of debating whether or not it’s true that apartments are LULUs. But clearly some things are LULUs. It’s annoyingly noisy to be literally adjacent to a fire station. A parking lot for garbage trucks or buses is unsightly and may have bad emissions. A dwelling for criminals is going to attract more crime than the average dwelling. So should these things not exist at all? That wouldn’t work. Should they all just be dumped in poor people’s neighborhoods? That doesn’t sound great. So that means sometimes the higher power — city or state government — has to tell the rich people “sorry, you’re getting the LULU.” People getting told that absolutely deserve our sympathy — it’s right in the name that it’s undesirable! — but unless the proposal is that we’re not going to have fire stations, the fire stations have to be somewhere.

Back to the homeless shelter, I really do think that in the long run we should be trying to move toward a world where we don’t really need many homeless shelters. But there are all kinds of specific questions around that, like what do you do with an indigent fentanyl addict? I’m not 100% sure I know what the answer is. But whatever it is, that person probably has to be located somewhere physically while treatment or whatever else it is you’re hoping to see work happens. I used to live down the block from a hardcore drug addict who happened to have a market-rate dwelling courtesy of some complicated arrangement involving his sister, and he was not the best neighbor. He died, which was sad, and I wish I knew a better way to help people in that situation.

James: I think it is well understood that comprehensive immigration reform is politically impossible right now, but is there a novel legislative architecture that could result in some change? E.g what if you combined a very conservative immigration bill (say, greatly restricting the asylum system by codifying Biden’s executive order into law) with a very liberal bill (say the Dream Act) and passing it as a single bill. Would such an approach, or other novel approach, be doomed to fail for the same reasons as comprehensive reform?

The issue with all these things is that legislative deals are possible if and only if members of Congress want to make legislative deals.

If House Republicans really want to see the Secure the Border Act enacted this Congress, the best way by far to achieve that would be to phone up some Democrats with credibility, shop the idea of attaching some liberal idea to it, and pass it as a package. But I think House Republicans think this is a good issue for them, that they have a good message bill on it, and that they’re going to win in 2024 and then legislate from a position of strength. So they’re not really interested in a deal. And because they’re not really interested in a deal, Democrats can be lazy and not really think that hard about what they sincerely believe about this whole thing. Maybe if Biden gets re-elected in 2024, the Republican calculus shifts.

Democrats, meanwhile, feel that anything that raises the salience of immigration is bad for them (and I think they are right), so they don’t want to do anything that would generate lots of talk about a possible immigration deal.

I don’t think I mentioned immigration explicitly in my “Two Kinds of Progressives” post, but I should say I’m a little surprised that you don’t see more vulnerable Dems taking an outright dive on this topic. Jon Tester voted against the DREAM Act in 2007 and 2010, which strikes me as a less defensible position both on the merits and politically than just endorsing the GOP border bill or even endorsing it while saying it doesn’t go far enough in its employer sanctions or whatever.

FrigidWind: A huge part of your work focuses on how to cater to swing voters. Why are you averse to pointing out that these tend to be socially conservative and economically liberal, and posting the data to back this up? Most of your popularism posts would be much better if they led with these graphs / tables to make the point quite explicit.

I actually did use that framework a lot in the first couple of years of the Trump administration, but I largely moved away from it because I think it’s a misleading framing that talked a bunch of people into the idea that there was a quiet electoral majority for socialism.

What I think is true is that if you analyze the political debate we were having in 2012, the majority of swing voters were — relative to that debate — closer to Obama on economics and closer to Romney on culture, and Obama won because he got most of those people to vote for him. Trump then won in 2016 by embracing trade protectionism and moving to the center on Social Security and Medicare. But in terms of the political debates of 2023, “we’re going to restore Roe-like protections for abortion rights” is almost certainly more popular than any new progressive economic ideas from Joe Biden. And if Leonard Leo were to give a speech next week saying “Dobbs was a big win, but we need to overturn Bostock and Obergerfell and Lawrence too!” I think that would be a defund-scale fiasco for the Republican Party.

All of which is to say that quadrant analysis is going to be highly sensitive to what questions you choose to ask. The main thing I want to get people to see is that no matter what stance you take on the issues, you are not going to get 50% of the population to agree with you about all of them. You improve your odds through a mix of taking popular stands on specific issues, breaking with your base sometimes, being vague/non-committal when you can get away with it, and generally projecting a chill vibe that suggests you like and respect people who disagree with you on some specifics.