I think we do need a new ism! I suspect the Trump administration (and Biden) would say China is up to lots of no-good things that pose externalities or just risks, so it is worth intervening. Some valid points, but not sure trade war is the answer.
Thank you Allison for another wonderful post. I hope that you and your loved ones have a great Thanksgiving! BTW Still get emails from students complimenting your presentation during “Covid.”
Just seems like many of the trade offs made decades ago have increased national security risk of being overly dependent on a country that doesn't share many of our values. With so many dual use technologies, the small yard/high fence may not be practical. Doesn't appear that anything we've done to try and nudge China into being a responsible stakeholder since the Clinton Administration has really worked. Of course, our political system doesn't like to talk about real trade offs in front of the public.
"1. How has it become conventional wisdom that economic neoliberalism was a failure and that we need to try something else?"
One impactful way in which neoliberalism has been accepted as a failure is via a constant reminder of this "fact" by prominent financial journalists. If something is repeated often enough and in varied contexts, all but the most thoughtful and discerning will eventually succumb. It is a shame that more people do not understand capitalism and what our world would be like if we revert to mercantilism.
"But how can something be a safe asset while also adding volatility to your portfolio? It can’t."
While I agree with the substance of Ms.Schrager's message, it is not technically correct unless you believe that risk = volatility. For most investors (vs traders), volatility is noise, rather than risk. Risk is the possibility of long term unrecoverable loss. Clearly not readily calculable or tractable as volatility, but, unlike the former, actually important.
Thanks for sharing your thoughts. I would argue that you're defining a "safe" asset too narrowly. And your conclusion that something can't both be a safe asset and add portfolio vol is too simplistic. In the states of the world that you defined (debasement, economic infrastructure collapse...) it is possible that bitcoin protects wealth. It may be that it only hedges a very extreme tail event, not an ordinary market drawdown. Which, if true, would very much place it in the safe haven bucket.
Spot on, but with one possible addition. I don't think one needs an "ism" like neo-liberalism to support the fundamental Smith-ian concept that when people want to engage in an exchange to their mutual benefit, government should have a good reason to interfere in that transaction. Not that there aren't some good reasons when it comes to some trades, but the burden of proof goes beyond a wave of the hand or concern for those who lose out in a competitive process. If we thought tariffs were good in and of themselves, why not a Constitutional amendment to let states enact them within the United States?
I think we do need a new ism! I suspect the Trump administration (and Biden) would say China is up to lots of no-good things that pose externalities or just risks, so it is worth intervening. Some valid points, but not sure trade war is the answer.
Thank you Allison for another wonderful post. I hope that you and your loved ones have a great Thanksgiving! BTW Still get emails from students complimenting your presentation during “Covid.”
Just seems like many of the trade offs made decades ago have increased national security risk of being overly dependent on a country that doesn't share many of our values. With so many dual use technologies, the small yard/high fence may not be practical. Doesn't appear that anything we've done to try and nudge China into being a responsible stakeholder since the Clinton Administration has really worked. Of course, our political system doesn't like to talk about real trade offs in front of the public.
agree, shows we should not depend on any one country, including ourselves.
"1. How has it become conventional wisdom that economic neoliberalism was a failure and that we need to try something else?"
One impactful way in which neoliberalism has been accepted as a failure is via a constant reminder of this "fact" by prominent financial journalists. If something is repeated often enough and in varied contexts, all but the most thoughtful and discerning will eventually succumb. It is a shame that more people do not understand capitalism and what our world would be like if we revert to mercantilism.
"But how can something be a safe asset while also adding volatility to your portfolio? It can’t."
While I agree with the substance of Ms.Schrager's message, it is not technically correct unless you believe that risk = volatility. For most investors (vs traders), volatility is noise, rather than risk. Risk is the possibility of long term unrecoverable loss. Clearly not readily calculable or tractable as volatility, but, unlike the former, actually important.
Otherwise. excellent points on tariffs
Thanks for sharing your thoughts. I would argue that you're defining a "safe" asset too narrowly. And your conclusion that something can't both be a safe asset and add portfolio vol is too simplistic. In the states of the world that you defined (debasement, economic infrastructure collapse...) it is possible that bitcoin protects wealth. It may be that it only hedges a very extreme tail event, not an ordinary market drawdown. Which, if true, would very much place it in the safe haven bucket.
Love your work, but not separating Bitcoin from crypto in your writings is unfortunate. Conflating the two indicates a lack of understanding.
Spot on, but with one possible addition. I don't think one needs an "ism" like neo-liberalism to support the fundamental Smith-ian concept that when people want to engage in an exchange to their mutual benefit, government should have a good reason to interfere in that transaction. Not that there aren't some good reasons when it comes to some trades, but the burden of proof goes beyond a wave of the hand or concern for those who lose out in a competitive process. If we thought tariffs were good in and of themselves, why not a Constitutional amendment to let states enact them within the United States?