ControlsFreak
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User ID: 1422
ControlsFreak
1hr ago
In the same way, I believe that the usefulness of knowledge about the biology, chemistry, physics, and dynamics of body weight probably doesn't depend on whether some group of people seems to actually "use" it or not.
ControlsFreak
1hr ago
I'm very clearly trying to articulate that I want to know if you will very clearly state that you think that knowledge about cooking is "useless" if all of those humans on earth don't do it, but magically becomes "useful" if they do.
ControlsFreak
3hr ago
So we assume the same willpower.
That is not a control on willpower. It's not saying anything about willpower. I've said nothing about willpower. It is not apparent how willpower is supposed to come into anything or what straw man you think you're arguing against.
A cooking change is a one time change.
No. You have to cook your meat every single time you eat it. Every single meal, every single day, for the rest of your life. You’re asking for half the humans on earth to fundamentally rewire their identity so that their primary value in life is their body; will you very clearly state that you think that this means that knowledge about cooking is "useless" if all of those humans on earth don't do it, but magically becomes "useful" if they do?
this is implying that bodybuilders aren’t preselected for the epigenetic expressions not associated with obesity
I never said any such thing.
ControlsFreak
3hr ago
As we know that the month of conception has no bearing on willpower
Right, so that is not a control for willpower.
A minority successfully do this
Please address my food cooking hypothetical.
only in the short-term
This is not true. Many people do it year-round for many years.
only by significantly modifying their social identity
Please address my food cooking hypothetical. One might say that it would require a significant modification to the hypothetical religious/social identity. Does that mean that knowledge about cooking is "useless"?
this has no effect on the longterm rate of obesity or the general population, because not everyone can turn their entire social identity into weightlifting (neither is this desirable)
Please address my food cooking hypothetical. I don't particularly care if everyone "can" change their entire social identity or whether it is "desirable". I am speaking purely descriptively.
I will additionally note that I have not, a single time in this conversation, made any claims about willpower, except that your claimed control for willpower was not, in fact, a control for willpower. I have no idea if there is even such a thing as a "general willpower factor" or, if there was, it would correlate to any particular behaviors. It doesn't seem to factor in to a descriptive account of body weight chemistry, physics, or dynamics.
ControlsFreak
4hr ago
you got lucky that it happened to be both correct at the start and steady over time.
I don't know what you mean by this. I didn't need something to happen to be correct. I gathered data, I looked at that data, and I saw that the trend line (across a range of inputs) was bang on at 500cal/day ≈ 1lb/wk. I didn't have to adjust for anything. That was just what the data said.
ControlsFreak
4hr ago
These things are usually buried in textbooks. Often in the world of, "Yeah, it can kinda be done, but it's expensive and time-consuming and doesn't really change much."
they can result in wildly different results based on unmeasured variables
I mean, not really? We have a pretty good handle on individual variability. It's not nothing, but it's not insane. And it doesn't generally change much from a practical standpoint. You can just use direct observation and measure your own point in that range of individual variability.
ControlsFreak
4hr ago
What this study shows is that in two cohorts controlled for willpower, one will simply be fatter due to their parent’s cold exposure.
That is not what this study shows. I'm not even sure how you would "control for willpower".
Unless willpower and lifestyle changes can be shown to significantly modulate obesity rates at a population-level, and in the long-term, in a way that isn’t merely survivorship bias or an outlier, then CICO is as useful, insightful, and interesting as saying “narcoleptics need to stay awake”...
This depends on what you're trying to do. For example, there are tons of athletes and bodybuilders who modulate their body weight through diet and lifestyle. Is this suddenly useless to them if some larger population behaves one way instead of another way?
This community loves Science (TM) and Rationalism (TM). Suppose you lived in a religious woo world, and everyone believed that the gods wanted you to eat raw meat and they determined whether or not you got sick. You discovered that, actually, the cooking process can improve digestion and kill pathogens. But you just couldn't convince other people to do it, for whatever reasons. Maybe there are folks out there claiming that it's just because they "lack willpower" to do it. Is your knowledge suddenly "useless" in the case where a bunch of people don't do it... but it would somehow magically become "useful" if a bunch of people started doing it?
Food wise, the advice, in my view is to eat Whole Foods, unprocessed foods, favoring plants and protein, and limiting carbs especially simple carbs. Then you add in some exercise especially muscle building exercises though even walking has benefits.
Do you expect that following your advice will cause people to consume fewer calories than they expend? Otherwise, I would find that this
advice if that is as far as it goes is precisely useless because it does [not] tell people how to actually stop using the drugs
This is really the rub. People want to claim that there is a "problem [they] see with CICO", but it's not actually a problem with CICO. It's a problem with advice for behavioral modification. That advice needs to be linked to a realistic approach to achieving the desired objective, given the reality of the underlying facts.
Imagine saying that the problem with math is that telling people that math is correct doesn't tell them how to actually learn math. ...that's a problem with math?!? That means that math should be viewed as useless or something? No, man. That's not a problem with math at all. Math is just fine. Math is correct, actually. People can, and do, learn math. Obviously, simply saying "math is correct" will not immediately and instantaneously result in someone learning math. Work still needs to be done. But people wayyyy overcorrect and want to imply that there's something wrong with math if they can't just easily, instantaneously, learn math with zero effort and nothing but an incantation of math being correct.
ControlsFreak
8hr ago
Should I believe my lying eyes? When my wife and I tracked our weight and caloric intake for a couple years, we had a range of different intakes, and the trend line was bang on at 500cal/day ≈ 1lb/wk. It was noisy, yes, but probably about as noisy as any measurement we have for any biological research.1 Taking another look at the data now, it would be kinda dumb to think about modeling it as a step function, S-curve, or deadzone or whatever. Generally, one needs some justification for moving to some other weird modeling assumption.
1 - Moreover, it is utterly unsurprising that it is so noisy, due to the mathematical realities of numerical analysis and differentiation. If anything, it was extremely surprising that it worked so well!
ControlsFreak
9hr ago
A pure CICO system couldn't explain why one person gains a few pounds every winter while an ostensibly-identical person (but fertilized in cold weather) doesn't.
h-What? My understanding of the claim is that those two people have slightly different COs. Therefore, a "pure CICO system" would explain it perfectly fine if we're able to quantize this component to individual variability. There are tons of different components to individual variability, and most of the time, we just don't bother quantizing them because they're often hard to measure and are small effect sizes anyway.
ControlsFreak
9hr ago
Which part of CICO do you think this is a blow to? There has always been some noise level of individual variability. This is inherent in basically all biology research. Sometimes, folks are able to probe a bit deeper into it, and we already have a variety of different ways to do so. Many of them are just too complicated to do most of the time for most people... and they're often usually relatively small effect sizes, anyway. Like, yes, can we slightly refine our estimate of one component of your CO if we take precise measurements of your individual organ sizes; is that a "blow" to CICO?
ControlsFreak
4d ago
Sure, "co-equal" is definitely not often defined extremely precisely. They're obviously not, like, mathematically "equal" or "identical" or anything. They don't have exactly equal tools or powers. They might even have different numbers on their Articles. But they all get Articles. They're all equally established by the Constitution. They all derive a sense of legitimacy as institutions from that establishment by an adopted Constitutional text. They all exercise powers and authorities given to them directly from the primary document, not some lesser establishment or delegation. No branch can simply eliminate another wholesale.1 (Though they obviously each have tools that can greatly impact the operations of the others.) And moving back a bit toward the discussion at hand, I think there is little sense in saying that national sovereignty is located purely within a strict subset of branches. They all have some component or part to play in the exercise of national sovereignty that no other bodies or institutions apart from them have.
1 - Congress comes the closest here, but even they must appeal to the judgment of the fifty separately sovereign states.
ControlsFreak
4d ago
Can you provide some sense of what you have in mind for a project like I was talking about, say, a new fighter jet?
ControlsFreak
4d ago
The solution is skin in the game. The person making the decisions needs to be personally impacted by outcomes.
...
Military projects should be tied to specific generals that care about a good legacy. And possibly a politician as well. Let those names become a curse or a word that means reliability to the grunts.
I don't see how that's really "skin in the game", by your own definition. It doesn't seem similar in kind to your other examples. Take the recent F-47 award. There are specific generals and politicians "tied to" it, at least at the moment of the major decision to award. I guess accountability has been achieved? What about all of my other discussion about the difficulties of judging the outcomes ten to twenty-five years from now? Donald Trump is certainly a politician who is trying to put his name on it. Whether you agree with his name being tied to it, looking at a life expectancy table, he's almost certainly going to be dead by the time some of those outcomes come 'round. Does he have "skin in the game" by your definition?
ControlsFreak
4d ago
When judges can override issues of national sovereignty
In the United States, national sovereignty is vested in three co-equal branches (plus, to the extent it still kinda counts as "national", fifty separately sovereign states).
literally there is NOTHING more important than a country deciding for itself who to let in and who to expel
You are correct that this is a very important thing for a country to decide. That makes it a teeny bit weird to get super upset about this case, in particular, since it appears that the government has claimed that this wasn't really a "decision" and was just an "error". Like, sure, someone could get a little bit into the details of the legal arguments, but on your own terms, it seems wayyyy less important than you're making it out to be.
Tyler Cowen has a Conversation with Jennifer Pahika on Reforming Government
I will pull one little segment.
COWEN: If someone says, when it comes to regulatory reform, accountability is not the solution, it’s the problem, do you agree?
PAHLKA: Accountability is not the solution, it’s the problem?
COWEN: You put in accountability, everything has to be measured, everything has to have a process. It’s judicial review. Should we have less accountability in government?
PAHLKA: In a certain sense, I would agree with that. I don’t think in an absolute sense. I think the way that we structure accountability is very flawed. I think we are holding public servants essentially accountable to metrics that are not proxies for real outcomes that people care about. When you have a very high focus on accountability that is really about fidelity to procedure and process instead of to the actual outcome, that’s not accountability.
COWEN: Outcomes are heterogeneous, they’re tricky, they’re long term. When you ask people to measure, you end up with a lot more emphasis on process than you want. So, maybe accountability is the problem. To say accountability for outcomes — that’s just going to morph into accountability for process. That’s what I observe, even in private companies. Big, successful, profitable private companies that we’re all familiar with — they have the same problem, as I’m sure you know.
PAHLKA: That they’re held accountable to the —
COWEN: There’s far too much process, bureaucracy, delays. They’re slow. Look at construction productivity in the United States. It’s terrible. It’s declined.
PAHLKA: Yes, I would agree with that.
COWEN: And that’s the private sector.
PAHLKA: Yes. I think one of the issues though is that there is more accountability to process in government than in the private sector, I believe.
COWEN: More in government.
PAHLKA: More in government.
COWEN: Yes, sure.
PAHLKA: Because in the private sector, if you don’t get the outcomes, you are unlikely to succeed financially.
COWEN: There’s a profit — clear goal. In government, it’s not the same kind of outcome. It collapses more into process.
PAHLKA: Yes, it collapses more into process, absolutely. I think also you have — what is it — Goodhart’s Law that says once a measure becomes a target, it ceases to be useful, and you see that everywhere in government. I think that’s part of what I mean about the new public management and the reinventing government in the ’90s was highly reliant on “Let’s set a goal and follow that goal.”
There can be real value in that. I’m not discrediting it entirely, but you do have that erosion of the value of those targets as people try to meet the target without actually meeting the outcome that was intended. I think that a more digital transformation approach that is instead able to change over time more quickly and say, “Wait, this target is no longer helping us get where we wanted to go. We’ve got to iterate on that. Let’s change it.” That can really, I think, get us out of that industrial era of thinking.
I want to pull on some threads in the vein of my previous comments on military research, development, and procurement. They talked about this some, but were also talking more broadly. I think the problem to be solved is perhaps most clearly cognizable in this domain. Reordering the discussion a bit, we'll start from the outcomes, the things that we're trying to achieve:
COWEN: Outcomes are heterogeneous, they’re tricky, they’re long term.
As I put it:
we have a situation where your military is very very rarely 'tested' (in fact, ideally it is very rare). You very rarely get actual feedback. When you do, you do not have access to the counterfactual of what would have happened if you had invested differently.
Look at the lead time for something like a modern fighter jet. What's the chance that the guy who originally greenlit the program is still around to be 'accountable' if/when it's actually used in a hot conflict, such that its performance can be assessed against the competition? Do you handicap that assessment at all? He made his decision a decade ago, seeing a certain set of problems that they were trying to solve. A decade or two later, your adversaries have also been developing their own systems. Should he be punished in some way for failing to completely predict how the operating environment would change over decades? Suppose he made the decision in Year X, and it came into service in Year X+10. It hypothetically would have performed perfectly well for a decade or two, but you just never had a hot war and never saw it. By the time Year X+25 rolls around and you do get into a hot war, it's now hot garbage in comparison to what else is out there? Is he blameworthy in some way? Should he be held 'accountable' in some way? There's a good chance he's now retired or even dead, so, uh, how are you going to do that?
Obviously, there is a spectrum here, but I would argue that a modern fighter jet is more toward the middle of the spectrum than at the far end. Yes, there are plenty of faster-turnaround things, but there are also lots of long lead time things. Even just think about the components/subsystems of the fighter jet. By the time a decision is made to greenlight the larger project, most of these have to be relatively mature. The gov't and company involved can probably take some risk on some of these, but they can't do too many. They want a fair amount of subsystems that they are confident can be integrated into the design and refined within their overall project schedule. That means that all of that investment had to be done even earlier.
Back to that guy who makes the decision. Who is that? Probably a general or a political appointee. Possibly a group of gov't stakeholders. How does he decide what to buy? Remember, he's trying to predict the future, and he doesn't actually know what his adversaries are going to do in the meantime. He has no direct outcomes by which to do this. He doesn't yet have some futarchy market to somehow predict the future. He basically just has educating himself on what's out there, what's possible, what's at various stages of maturity, and where various people think stuff might be going. As I put it in the doubly-linked comment:
There will be a plethora of "experts" who have their own opinions. Some top military folks in the early 1900s will think that airplanes are just toys, while others will tell you that they can change the nature of warfare; how do you know who to believe and where to put your money?
And so, I think Tyler would claim, this fundamentally drives these decisions to be focused on process rather than outcome. The outcome isn't accessible and likely isn't going to be. Instead, people basically just implement a process to ensure that the decisionmaker(s) are talking to the right stakeholders, getting a wide variety of input, not just shoveling contracts to their buddies, etc. Sure, these decisionmakers still have some leeway to put their mark on the whole thing, but what's the plan for adding more 'accountability' to them that isn't just, "Whelp, let's make sure they go through enough process that they don't have the obvious failure modes, and then sort of hope that their personal mark on the process is generally good, because we've built up some trust in the guy(s) over some years"?
Now, think like a company or research org that is considering investing in lower maturity subsystems. It's a hellova risk to do that with such an incredibly long lead time and, frankly, a pretty low chance of having your product selected. You're going to care a lot about what that process looks like, who the relevant stakeholders/decisionmakers are, and what their proclivities are. If you're pretty confident that the guy(s) in charge mostly don't give a shit about airplanes, you're even more unlikely to invest a bunch of money in developing them or their components. Will some crazy company spent thirty years to develop a fully-formed system, getting no contracts anywhere along the way, just hoping that once the generals see it complete and in action (ish, because again, there's not a hot war and you can't really demonstrate the meaningfulness of having a thousand airplanes with your one prototype), they'll finally be 'forced' to acknowledge how effective it's going to be, finally unable to brush it off, and finally actually buy it for bazillions of dollars? I guess, maybe, sometimes. But probably not very often. Thus, I think it's pretty unlikely that the gov't can just completely wash its hands of any involvement in the research/development pipeline and just say, "Companies will always bring us fully-formed products, and we'll decide to buy the best ones." Pahlka touches on a need for the gov't to "insource" at least some parts of things:
There are rumors that DOGE is actually pro-insourcing more tech talent in government. I know you’re not hearing about that now. It may just be a rumor, and it may not be true, so don’t quote me on this. I certainly think that folks in Musk’s world came in and looked at government, and said, “How do you even operate with so little technical competence in-house? That’s crazy.” And it is crazy. They’re right about that.
We’ll either end up, I think, even further privatizing not just the software, but the whole operations as the software and the operations are increasingly melded — again, this is not new — or we’ll be forced finally to gain the internal competence that we have always needed and start to do this a little bit better.
Again, I think she's talking more broadly, but that bit about software and operations being very melded is quite poignant when thinking about military applications.
Getting back to the problem of not knowing what's going to be effective in the future, the traditional solution is to just fund pretty broadly, through multiple mechanisms. Not sure about airplanes? Have one guy/group who seem to like airplanes go ahead and fund a variety of airplane-related stuff. Have some other guy who doesn't like airplanes fund some other stuff. There's obviously a bunch of risky capital allocation questions here, and decisions ultimately have to be made. Those are tough decisions, but how do you add 'accountability' to them? I don't know. I think the easy/lazy way is basically a form of just looking at your 'guys' (your airplane guy, your submarine guy, etc.) and ask, "What have you done for me lately?" The obvious concern is that that makes all your guys focus their portfolios much more heavily toward shorter timelines. But part of the point of the government being 'eternal' is that it should be able to be thinking on longer time horizons, because that may end up being more valuable than just short time horizon things that can be more tightly linked to 'outcomes' or 'accountability'.
I started off being a bit taken aback by the idea Tyler proposed that we should almost just abandon accountability. I've generally been somewhat pro-accountability, and I know folks here have talked about it a lot. But upon reflection, with my pre-existing but not previously-connected thoughts on military procurement, it makes a bit more sense to me that there is a real tension here with no real easy solutions.
ControlsFreak
5d ago
I'm seeing:
if also available in another language...
and
Despite subparagraph 2 of the first paragraph, the parties to an individual employment contract that is a contract of adhesion may be bound only by its version in a language other than French if, after examining its French version, such is their express wish. In the other cases, an individual employment contract may be drawn up exclusively in a language other than French at the express wish of the parties. Despite subparagraph 3 of the first paragraph, the employer may communicate in writing with a worker exclusively in a language other than French if the latter has so requested.
This does not read to me as "disallowing English". In fact, I would say that it expressly allows it. Now, obviously, if an employee wants it in French, they have to do it in French, too. But then we get into details of the compelled speech doctrine, which @Glassnoser has refused to acknowledge even exists, how it interacts with commercial speech, etc. I think that because that conversation gets complicated, he'd rather just fib a bit and claim that it "disallows English", when it doesn't seem to.
ControlsFreak
5d ago
Yeah, and like I said, before that, we were in the land of memes. I went on to talk about the research that you sort of kind of cited. You didn't actually cite it in enough detail to tell if you were just invoking the meme version of that research or the real version of that research.
ControlsFreak
6d ago
Ah, see, we were in the land of memes, not the finer points of research. This is a fine point, indeed, and most people should probably mostly ignore it. The meme version of the constrained daily energy expenditure model is mostly wrong, anyway (as opposed to the real version). It's certainly not 100%. It's dose dependent, etc. One can get into the estimates of this and that, but it's probably mostly swamped by individual variability for most people, and most people are probably not taking a genuine step function with their exercise in a way that lends itself to making these sorts of estimates useful. If anything, if someone is actually paying close enough attention for this sort of thing to matter, the step function is likely to be a step down function, where a normally-highly-athletic person who is paying close attention to their energy balance gets injured or something and their physical activity level goes down significantly for an extended period of time.
ControlsFreak
6d ago
I think the distinction I would make is between the means being used to prevent automation and the result of preventing automation. That is, for the longshoreman, the means they used to prevent automation was to threaten to shut down some amount of port traffic (I don't actually know how much; I assume a good chunk of it). This would be pretty damaging to the economy. Whereas, as you say, once they've come to a deal that prevents some amount of automation, the result looks more like a drag on productivity. In their case, it would say that their drag on productivity is mostly confined to just their little corner of the economy. Other countries' ports will continue to become more and more efficient than ours. This may impact the trade flowing through them to some extent, but it probably kinda just shows up as a sort of a ransom that has to be paid, which ultimately is not that huge; there's just not that many of them that need paid off in the end.
Tariffs are actually probably a bit of a lesser threat to the economy. I used the strong wording, but I recall that back during Trump I, I had a comment in the old place quoting Krugman making an estimate that a Trumpian trade war might 'only' cost about 3% of GDP.1 IIRC, Krugman was doing a back-of-the-envelope that assumed that Trump would follow some academic paper for "optimal tariffs", and my guess is that what Trump II has now actually done is, uh, probably not that. Of course, in the limit, as tariffs go to the moon, trade grinds to a halt almost entirely, and it sort of more closely resembles longshoremen shutting down the ports.
Now, what's the ransom that has to be paid in order to actually stop automation in manufacturing? My answer would be, "???". Unlike ports, which are very concentrated in space, amenable to discrete deals that stop specific automation from occurring, and not subject to much competition, manufacturing is everywhere and subject to intense competition. Tariffs don't actually have a mechanism to stop automation in all these places. It's just paying a temporary ransom to some existing manufacturers, who might use part of that ransom to keep a few marginal employees around a little bit longer. They're still going to adopt more automation; if they don't, their competitors will (foreign and domestic). Even if tariffs magically stopped all domestic manufacturing automation, the drag on productivity growth will gradually make foreign manufacturers more and more competitive over time, and uh, I guess we'll have to raise even higher tariffs?! The only real limit in sight would be once they're high enough that they've basically killed all US imports. Yes, a nice ransom to some domestic manufacturers, but if all that automation keeps chugging along overseas, that basically plays out as US GDP numbers dragging and dragging and dragging, while foreigner GDPs moon.
Tariffs probably won't actually wreck the economy in one fell swoop, but they won't fundamentally affect the process of automation in manufacturing, either. They'll just cause some folks to get a little ransom and long-term terrible growth. Even the difference between 1-2% GDP growth each year is getting close to a 2x difference over 50 years.
1 - I absolutely know that Krugman is a partisan hack. His article was actually trying to downplay how bad it would be, so I thought on balance it was reasonable to use him as an OOM estimate, given the context; it really did not feel like he was trying to super inflate the estimate, even though that what I would have otherwise expected from him. I recall it well, because I compared that to the estimates of the 'cost' of climate change in terms of GDP (as well as a few other things), and it was hilarious how little of a thing climate change was.
ControlsFreak
6d ago
This abridges freedom of speech.
404 - Argument Not Found
ControlsFreak
6d ago
Which part?
ControlsFreak
6d ago
Which part?
CICO is descriptively correct. Basically everyone agrees with that. There are huge disputes about whether it's prescriptively correct, with adjacent arguments about what constitutes "prescribing" it. One might even say that prescribing ozempic is, in a roundabout way, prescribing CICO, because the primary mechanism by which it causes you to lose weight is that you eat fewer calories than you use.
The meme is that you don't lose weight from cardio, or more pithily, "You can't outrun a bad diet." Harvard has some estimates of calorie usage by weight/activity here. Double them if you're thinking, "I'm going to do this for an hour." Well, are you going to do that every day? 500cal/day ≈ 1lb/week. I have a good friend who is an MD and a prof in public health who just flatly said, "We've known that number in the literature for a long time." It is descriptively correct. Many of those activities get you ≈500cal/hr. IF you do that every day AND eat at what is otherwise your maintenance, you will lose ≈1lb/week. Oh, you're only doing it three days a week? Reduce that rate by half. Oh, you're having an extra bottle of gatorade while you ride your bike (on top of what is otherwise your normal maintenance), that's 140cal (just whatever random flavor came up first in a search, 20oz bottle), taking you down another third. "I exercise all week so I can eat good"? ROFL.
One cannot determine whether a sink will overflow just by looking at the rate at which water is going down the drain. You need the rate that water is going in, too. Implicit in the meme is, "You don't lose weight by cardio alone," because if that's your plan, and your plan is to completely ignore what you're eating, it's extremely likely that you're just going to eat more.
John Cochrane opines on deficits (trade and budgetary) and tariffs
I'll start where he describes what is perhaps the most fundamental driver of cross-border investment:
This seems like a perfectly fine thing. If there are reasons that make investing in China look less attractive to retirement savers, they should look elsewhere. It would actually be a promising thing for the US if they found that investing in US businesses was comparatively attractive. He then highlights "three bedrock principles of economics":
He then squarely aims at the G term in that equation:
How do tariffs play in?
I'd sum this up in going back to the fundamental equation he presented: [(M-X) = (I-S) + (G-T)]. If you want to make the left hand side of that equation go to zero, then you must make something on the right hand side change, too. My last sentence was a bit too heavy on "agency of the theoretician", as though one can simply grab one of those variables and turn it up or down. In reality, the complex interaction of transactions will necessarily bring the equation to equality, and you might not get to choose how it gets there. Policy-makers sort of get to directly tweak G and T, but they have less direct tools for I and S. I read him as saying that the LHS is about $1T and that (G-T) is about $1.3T, meaning that (I-S) is presumably about -$0.3T. So, where is that $1T change coming from? Policymakers can cut G or raise T, naturally pissing off every voter who is living high on the deficit, but they obviously don't have to. If they don't, his conclusion is that we're in for a world of change when it comes to I and S. About $1T worth of change.
He does not spell it out, but seems to assume that the natural mechanism that interacts with I and S is the interest rate.
If the influx of foreign investment, which was keeping interest rates low, dries up, companies will have to look to domestic savers. But those domestic savers didn't want to save at the current interest rates! If they did, they would be! So companies (and the gov't) will have to offer higher interest rates. That will be necessary to draw American savings. At the same time, having to pay higher interest rates means that companies can't invest as easily in more speculative, longer-timeline opportunities. Note that it doesn't make sense that they're suddenly going to invest more in domestic factories; if those domestic factories were profitable at the current, lower interest rates, they'd already be doing it! Instead, they're going to invest in less. Thus, fewer jobs, less innovation, and thus, recession. That is how I read the predictions. (He also thinks that rising interest rates will hit the federal government, as well, precipitating a debt crisis.)
Cochrane has been a fiscal "hawk" for a while. The fundamental thing to him is that the government has been borrowing tons of money to subsidize American consumption. It's been doing this for a while. At some point, you've gotta find a way to pay the piper. You can try not to, but the equation will balance itself. He just thinks that forcing the LHS to zero by gov't policy creates significant difficulties along the way.
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