Claims

Crises are the only times major policy innovations occur; in calm, prosperous periods, institutional change is minimal because people are satisfied; institutions are only rebuilt when current trajectory becomes clearly hopeless, forcing comprehensive re-evaluation.

By around 2011, the Obama administration bought the idea that shale was 'the fix,' believing shale would solve American energy dependence on the Middle East, which led to the decision to sanction Iran, believing they could afford to do so without oil prices spiking.

The Biden administration will come under considerable pressure from domestic politics around the Israel-Hamas conflict, and with the 2024 election coming, this pressure will intensify regarding how far they can go supporting Israel without causing themselves political problems, with the energy situation not yet being particularly worrying since markets haven't seen serious crisis like immediately after Russia's Ukraine invasion.

The United States' geopolitical strength in the mid-20th century came from dominance in energy markets; after conventional US oil peak in 1970 and Nixon eliminating gold standard, much of US geopolitical power came from expansion of dollar-denominated debt in developing nations combined with petrodollar to support the world's largest military.

The way the international banking system works is the most important thing about the dollar's position now, more than productivity, energy independence, or military power; the US has been able to use other countries' companies' access to the American banking system to make foreign policy work.

The willingness to use banking sanctions as a weapon incentivizes resistance to dollar system; European countries tried hard to find ways to make financial transactions with Iran after 2018 but found it pretty much impossible to do so.

What underpins the strength and ubiquity and confidence in the US dollar is uncertain—could be productivity and economy size, US energy independence, or primarily military power; but if it's military power and the US is printing dollars and going further into debt paying for military, there's an unraveling where how the system was put together.

Thompson's book Disorder argues that the political shocks of the 2010s (Brexit, Trump election) had structural explanations rooted in energy history rather than being mere episodes of political psychodrama, and that understanding these events through an energy lens explains them in ways conventional accounts cannot.

There is profound resentment in many oil-producing countries among citizens about what looks to them like foreign extractivism with heavy legacy undertones of imperial past, shown by domestic resistance that Western oil companies faced in Iraq and inability to succeed after the age of energy nationalism in the 1970s.

Marxist frameworks calling for abolition of money, class, and state are unworkable because classlessness is attractive but legal equality already achieves it, and abolishing money removes the price signal mechanism needed for decentralized coordination.

Real communism is not possible in practice because benevolent central planners inevitably become authoritarian, turning the economy into an efficient command grid that lacks human freedom and market responsiveness.

Socialism is closer to post-labor economics than other leftist frameworks but still fails because it kills private property—the very tool that post-labor economics uses to fund broad dividends; private property is the core differentiator between post-labor and socialist approaches.

There is something about the idea of universal basic income that empowers people in the finest tradition of capitalism by allowing them to make decisions about what they most need.

The extremes of anything are bad—laissez-faire policies led to stock market crash and housing market crash, and extremely robust programs created graft, so there needs to be a balance between markets and regulation.

Every form of land regulation has drawbacks that accumulate over time and eventually become problematic; the Chinese leasehold system worked well for a long time until diminishing returns and overuse created current crises.

Economic inequality is deeply corrosive of a social order because in a capitalist system economic power is political power—money is the power to command the state and determine outcomes for society.

Political and economic power plays out in obvious ways such as who controls candidates for office and whose lobbying is influential, but it also plays out in more subtle ways through the moral psychology of social stability.

Hayek's 'Road to Serfdom' showed that severe economic hardship (like Weimar 1923) eventually leads populations to support authoritarian political solutions rather than return to sound money and free markets, setting the stage for fascism.

Without long-term ramifications like starvation, energy shortages, and lack of circulating medium worth preserving, people are unlikely to embrace free markets and sound money; the political outcome of collapse is uncertain and likely worse than current systems.

Friction-reducing in systems is not always good; what looks like a bug may be a feature for some constituency, and reducing friction necessarily harms those whose interests rely on friction.

Society is inconsistent in wanting innovation while simultaneously creating structural barriers to it through regulation; healthcare costs and drug discovery rates decline while people complain about lack of innovation, yet regulations make entry and drug development harder.

Early Marx predicted capitalism would collapse due to internal crises of production, but the Frankfurt School argues Marx was wrong: the political system intervened through regulation, labor unions, and social policy, re-establishing systemic equilibrium and preventing collapse.

Property transfer payments and progressive taxation by the political system can address the legitimacy crisis created by unequal wealth distribution in the economic system, increasing perceived legitimacy and preventing systemic crisis.

Communism with Chinese characteristics means one-party government but with most property in private hands and fair amount of free enterprise; it's a marvelous economic system and shouldn't be criticized for not being Western democracy.

Druckenmiller sees no stopping mechanism for the elite-commoner rift created by meritocratic clustering and wealth concentration until major economic and political dislocations force change, and this cannot be reversed by policy since it's 'built into the system.'

When economic models break, political systems always break—there has never been an exception throughout history. China's economic model (mass import of raw commodities and energy, mass export of finished goods to consumer markets) is breaking because end consumer markets are shrinking and trade tensions are destroying supply chains, making political disintegration inevitable.

Democracy is more suited to operation of capital controls than to free movement of capital, because when governments are elected to serve the people and capital can flow freely, capital arbitrages away the government's ability to deliver (e.g., threatening to leave if taxes rise), giving capital veto power over democracy.

It is easier for a special interest (faction) to manipulate the levers of power at the local level than at the national level, so courts must be especially careful to protect constitutional liberties locally, since individuals are often powerless in the political process and only meet powerful interests on a level playing field in court.

Teachers unions are uniquely politically powerful because teachers are present in roughly equal numbers in every legislative and congressional district (since schools follow population), making them simultaneously dispersed and concentrated—a combination that lets them influence both local and national politics; their power grew as private-sector unions waned.

Major policy reform requires a political entrepreneur who sells a broad vision to the public to head off interest groups; intercity transportation deregulation succeeded not by selling technical details but by framing it during 1970s inflation as a way to increase competition and fight inflation.

Central banking politicizes the money supply, creating circumstances where competing interest groups (such as debtors who benefit from inflation) lobby for inflation or deflation; once money is politicized it becomes harder to return to a neutral system because beneficiaries resist losing their favors.

EU Net Pulls Members Toward Markets

The EU, despite annoying regulations, on net pulls Europe toward markets because countries getting ready to join improve their economic-freedom and laissez-faire scores on the path to accession (and may increase them slightly after joining), nagging less market-friendly post-Germany eastern members toward greater economic freedom—like a Rocky training montage.

Governments Are Shaped by Their Citizens

Governments and productivity are shaped by the citizens of a nation even under authoritarian or totalitarian regimes, because rulers can only diverge so far from the masses on average, as recently seen in China where even a strong dictatorship had to listen to the people.

Successful Monarchies Are Really Oligarchies

Neoreactionaries romanticize monarchy mistakenly, because in equilibrium kings are almost always 'king and council'—something more like a corporate board than either a sole entrepreneur-owner or a stationary-bandit monarch—so the successful so-called monarchies aren't really monarchies but oligarchies.

The Fed Works Because It Has Real Independence

The Fed functions as a non-corrupt technocracy because its officials have guaranteed long terms and it prints its own money to spend, forcing Congress to make a real effort to change anything—'a room of their own'—whereas the FDA and CDC must come to Congress for money annually and serve at the president's pleasure, leaving them in a realm of slack and reflecting Congress's muddled disarray rather than a culture of raw technocracy.

China Poor Because Communism Is Dumb

China is the poorest majority-Chinese country primarily because communism is a major mistake with decades-long negative effects on institutional quality, leaving China stuck in an institutional cul-de-sac; the issue is not non-linear ethnic composition effects, and North Korea would be an even bigger deep-roots outlier than China.

Make the FDA and CDC More Like the Fed

Rather than increasing presidential power, the power of independent committees should be increased: FDA and CDC reform should make them more like the Fed, with appointed experts on long terms who feel free to ignore Congress and build their own technocratic culture.

Elites Below Rich Democracies Become Rent Seekers

Handing power to elites works well in moderately-or-more democratic rich countries (Amartya Sen's definition: competitive parties, free press), but below the level of rich democracies, empowering elites tends to produce old-fashioned Gordon Tullock rent seekers who steer everything toward themselves and ignore the masses—which is why '10% Less Democracy' targets only rich democracies.

Politicians Mediate Voters' Contradictory Demands

America is more libertarian than the median voter's stated preferences because politicians facing reelection trade off between what voters say they want and the economic growth that actually helps them win, mediating voters' contradictory demands—'I don't want you to pull off the bandaid, but I want my wound to get better'—so delegating authority to elected politicians yields some benefits of elitism even within a democracy.

Independent Central Bank Faces Political Pressure

People have forgotten political economy, wrongly assuming that if a central bank says inflation will average 2% it will; political pressures on monetary policy are important and underappreciated, which is why Rogoff is returning to the topic he pioneered with the first paper on why central banks should be independent.

Partisan Debt Ratchet Theory

Debt keeps piling up because of a partisan dynamic (per Alesina-type models): when the liberal party is in power it spends and borrows because it may lose control in the future, and when conservatives are in power they cut taxes and build up debt—so whoever is in power says don't pay attention to the debt, producing the ratchet we see today.

Political Business Cycles Are Empirically Overwhelming

Politicians everywhere who have the power try to goose up the economy before an election, and the empirical evidence for this is overwhelming; the paradox his 1987 paper addressed is why this fools anyone, modeling it as a signaling game where voters know they're being manipulated but vote for the incumbent anyway.

Catalan independence is overrated 19th-century nationalism

Catalan independence is overrated because it is driven mainly by a 19th-century sense of nationalism and resentment at being treated badly by Madrid, with no clear upside; in a thriving European Union regions can achieve more than on their own, and breaking up Spain would not serve the larger goal of a politically richer, deeply democratic Europe.

Liberalism before democracy is easier than the reverse

In Western Europe and Britain, liberal ideas developed before the franchise became a mass franchise, making it easier to embed tolerance, separation of powers, and rule of law; in the Eastern Mediterranean and places like Turkey, nationalist mass mobilization and mass-franchise regimes came first, so trying to build liberalism afterward is much harder, though not impossible.

Geography matters by enabling transfer of ideas and benchmarking

Geography mattered for development not deterministically but by enabling the transfer of ideas, competition, and benchmarking; France had initial conditions resembling Central/Eastern Europe but became a Western democracy because its proximity to Britain and the Netherlands shaped what kind of country it aspired to be, and Vietnam's post-opening success owes much to being located in Asia rather than Latin America.

Social transformation, not growth, built liberal democracy

What enabled the rise of the middle class and liberal democracy in archetypal cases like Britain was not high growth rates (which were modest by modern emerging-market standards) but the qualitative transformation of the economy and social structure: the spread of bourgeois liberal values and restraints placed on what the state could do.

Possibilism: outcomes are 50% structure, 50% agency

Following Hirschman's notion of possibilism, deterministic theories of development (industrialization then urbanization then bourgeoisie then democracy) overstate inevitability; much of development is maneuvering around constraints bequeathed by geography and history, so even if 50% is driven by exogenous conditions, 50% remains in one's hands.

Rapid growth can aggravate rather than ease social tensions

Rapid growth would not necessarily have eliminated the ethnic, regional, and tribal tensions afflicting countries like Nigeria, and may even aggravate them; the Arab Spring uprisings arose not in the least-developed Arab states but in the most rapidly developing ones like Tunisia and Egypt.

Liberal democracy needs restraints on the median voter

Democracy has two things we care about: reflecting the median voter's views, and preventing the median voter from doing whatever it wants to the rest of the population; the rise of electoral democracies worldwide (now outnumbering autocracies) has delivered the first but lacks the liberal element of rule of law and minority protections, allowing election winners to trample the rights of non-majorities.

Euro crisis was interdependence, not Greek profligacy

European integration was always an elite project sold to populations rather than demanded by them; the euro crisis was fundamentally a crisis of interdependence, with German banks as much a source as Greek or Spanish borrowers, but elites framed it moralistically as North disciplining a profligate South, a political failure that now makes the situation hard to undo.