My 12 Rules of Life

There’s a practice going around where folks are listing their 12 rules for life based on Jordan Peterson’s latest book “12 Rules for Life: An Antidote to Chaos.” 

The Irish Times recently wrote on Peterson’s book calling it an “antidote to nihilism and identity politics.” Russ Roberts interviews Peterson here. I’ve started reading it and it seems great.  

I thought that I’d post my 12 rules for life in order to join the fun. However, these really aren’t my 12 rules. Rather, this is a set of practices that I happen to be thinking about right now.

For those who are familiar with Alexander Shaia, many of these are influenced by (or flat borrowed) from his essential practices (The Four Gospel Journey is worth reading for even the most devout atheists among you). Others are based on my own experiences and research on the importance of proverbs.

But anyway… here you go:

(1)  Start from a place of unity. Contemplative conversation often starts with the foundation that we are one. This is not to say that we think alike or are actually the same in every respect. However, when we put our differences aside (which are usually much less significant than we make them out to be) we can start to understand each other’s desires and challenges. And humans tend to have the same basic desires and challenges.

Starting from a place of unity also helps move away from the idea that we must win the argument. Discussion is almost never a zero-sum situation. But rather it’s about seeking to understand one another and our differences.

(2)  Connect with others through shared movements. We have become so separated from one another through everyday life that we forget that something besides ourselves is carrying us along. This includes raising kids, helping family members, shared celebrations of life such as funerals and weddings and birthdays, doing service projects in our communities, or visiting neighbors. All of these things give us a sense of aliveness that is more than oneself.

(3)  Engage in the creative process. Experience something that has been carrying you that is different from the conscious mind. Create something that wouldn’t exist if not for you. Use this to remind yourself that no work is every finished.  

(4)  Find the quiet center. Quiet or silent meditation allows us to observe our thoughts and let them melt away. Active meditation excites the brain in a way that moves things from our logical mind to our soul.

(5)  Expand into risk. If we are looking for a life that is safe and without risk it is not a spiritual life. Don’t seek predictability. Learn to appreciate that surprise is a gift.

(6)  Learn to let go. There is a pattern and a cycle to life. You need to remind yourself that you are not in charge. Receive chaos as a gift.

(7)  Celebrate diversity. Welcome and celebrate all. We are much better off with each other than without.

(8)  Make the great leap of trust. Trust is the core to every developing human. Humans are going to betray you. And you’ll betray yourself. Pretty regularly in fact. But you must learn to let this betrayal go and trust again. It’s what makes us people.

(9)  Take proverbs seriously. Some proverbs are silly and others are more profound. However, at some point someone found all proverbs to be a helpful guide for living a good life or dealing with challenges. It wouldn’t be wise to throw out someone else’s wisdom based on the presumption that it doesn’t apply to you.  

(10) Go where you are uncomfortable. Most of the other practices listed here lead to this one. However, real maturation is the ability to be so comfortable with oneself that you are comfortable as an outcast (or in the wilderness as some would say). This is the ability to physically go into tough situations represented by your mind and out into the real world.  

We are often too afraid of what our families or communities or employers or whoever will think of us. And this often holds us back from giving people our greatest gifts.

(11) Don’t worry about being original. You’re already original. Any perspective or combination of ideas that you bring to something is original. In general, I think we over emphasize the importance of true originality (what is that anyway?) and underemphasize the importance of helpfulness. That said, I am as attracted to original ideas than anyone.

(12) Stop and think about where you are in the universe every once in a while. It’s huge. Really big. And there’s probably intelligent life out there and it probably doesn’t have a nervous system or process information the same way that we do. If you need help with this, go check out the documentary on Voyager. 

How Much Does "Trump Country" Rely on Exports?

Last week the Department of Commerce released recommendations for tariffs on steel and aluminum under section 232 of the Trade Expansion Act of 1962. As the report notes, the President is required to make a decision on these tariffs by April.

This recommendation comes after a period of an export slowdown.

As Joseph Parilla and Nick Marchio note using the Brookings Export Monitor database: “Only 8 of the 35 major industries experienced growth between 2014 and 2016: educational and medical services, management and legal services, commodities [e.g., agriculture], travel and tourism, and the technology sector.”

Exports for many manufacturing industries are down including machinery, transportation equipment, and textiles. And many of these industries are users (rather than producers) of steel or aluminum.

To add an additional flavor to what is going on here I started digging around with the Export Monitor data that the Brookings Institution puts together and 2016 election results for the 100 largest metro areas. A couple of rough charts are below.

In 2016, 87 percent of Americans living in a metropolitan or metropolitan statistical area (as determined by the Office of Management and Budget). These are areas with a “substantial population nucleus, together with adjacent communities having a high degree of economic and social integration….” About 68 percent of the population lived in one of the 100 most populated metro areas.  

A few of interesting things standout. 

(1) Trump did better in areas where exports have been growing more recently and worse in areas where exports have been slowing down.

Where have exports been growing? Coal and petroleum is growing. Oil and gas too. So is agriculture. This all seems very much to be Trump’s base.

But this also seems somewhat inconsistent with the narrative that Trump won because of areas where exports (and jobs) are in decline.

(2) Clinton did worse than Obama in areas where exports have been growing more recently. However, she did about the same as Obama independent of growth or decline over the entire Obama administration.   

(3) Trump did better in areas where exports were more likely to be a higher percentage of the local economy. 

(4) Trump (2016) did better than Romney (2012) in areas where exports are on the rise and where exports are a more important part of the economy. In areas where Trump won, exports accounted for 10.3 percent of the economy compared to 9.6 percent in areas where he lost. In areas that Romney won in 2012, exports accounted for 9.2 percent of the economy in 2016.

Overall this tells me that exporting country is "Trump country." But that's only for areas where exports are on the rise: oil & gas, services, and agriculture. Not manufacturing. At least not for places where two-thirds of the country live. 


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Individualism is Not the Problem

Elizabeth Bruenig’s article on “the antisocial politics of Trump” has received some attention. 

Here’s her main point:

If only that world were really so far away. In reality, it is already here. What unites workfare, the annihilation of DACA and the war on unions is a totalizing individualism — the belief that people are essentially isolated individuals. That we are alone before we are together. That we are more and not less ourselves in total isolation. From that view flow policies that disregard or deny that people are, in fact, embedded in families, communities and industries, and that their bonds and obligations are powerful and ought to be respected and protected by the state. No politics issuing from that view can ever cultivate unity.

Individualism is (according to the Oxford English Dictionary):

(1) The habit or principle of being independent and self-reliant.

(1.1) Self-centered feeling or conduct; egoism.

(2) A social theory favoring freedom of action for individuals over collective or state control.

Individualism is often used to describe qualities of being an individual or a unit that cannot be divided (i.e., a person).  

There’s a significant difference between (1) and (2) found in the OED definition. Being completely self-reliant is not the same thing as favoring freedom of action. How many libertarians would live on their own islands or in a bunker in the woods without any interactions with the outside world? Any more than those favoring similarly closed Marxist communities?  

Likewise, there is a significant difference between the individualism used to define the qualities of a person (whether indivisible or unique) and self-reliance. Many of those who buy and sell at local farmers markets across the country exemplify the qualities of individualism but are far from self-reliant.

We are inherently social beings and (at the same time) we are individuals. And in both respects, we are more similar than we are different. That is not to say that we think in the same ways or have the same strengths and weaknesses. But we have the same basic desires and challenges. We travel on the same paths even though our journeys may not be the same.

By focusing on our differences (rather than our similarities) we tend to overemphasize our individualism (e.g., “no one understands my situation because I am different”) rather than embracing its beauty and subtleties (e.g., “although my journey might be unique others have traveled on this same path before and I can learn from them”).

This can drive us from benefiting from the unique qualities of the individual to feeling like we must be self-reliant. And this is destructive. Adam Smith lectured his students in the 1760s that “in a savage nation everyone enjoys the fruit of his own labor, yet their Indigence is greater than anywhere.” Self-reliance yields poverty. But individualism doesn’t necessary yield self-reliance.

At the same time, it is our individual contributions that make this world beautiful. It’s the division of labor that allows us to benefit from the many unique contributions of our brothers and sisters. Individualism can, therefore, yield abundance and remove misery.

How do we appreciate the individual while staying engaged? Adam Smith suggested that we might use sympathy to understand the people that we interact with every day through exchange. You have to know what your trading partners want to engage in reciprocal trade. And it helps to know their motivation in order to understand what they want. 

There are several Trump doctrines. But radical individualism through self-reliance is not one. The form of nationalism that is present today, and to which Trump seems to subscribe, is a reaction to something that has been going within our communities.

Karl Polanyi suggested that “nationalism is a protective reaction to the dangers inherent in an interdependent world.” And by an interdependent world he meant an economy with a semi-liberal market where rigidities result in lost income or unemployment. These rigidities are less prevalent in a totally free market which itself may be a form of utopia.

When people lose their jobs and their identity because a company moves to China, they might respond with nationalism because it’s something that they can reach out and hold onto. They can draw a border or define people by race in an attempt to protect “our people versus their people.” Boundaries are, to Polanyi, “shock absorbers” to the market. And when democracy cannot deliver, they push authoritarianism. For Polanyi’s nationalists, the type of government is a means to an end.

One of the ways in which we are similar is that we come programmed with concerns over our own safety. In a battle between identity preservation and the benefits of a liberal market, preservation tends to win. This is especially true when the market forces seem to threaten the identity of contained groups of people (e.g., when everyone in a town works for one company and the company goes out of business).  

I think this model is fairly constructive. If you think about where nationalism has taken hold in America it seems to be in more rural communities that have, in fact, been damaged by our semi-liberal (or semi-illiberal) market economy. Today’s form of nationalism hasn’t taken hold in areas that have benefited from vibrant interactions through trade or where there is a perception that jobs are just as easily gained as lost.

But how do you enter into a conversation with these communities in a way in which we are listening to them and they are listening to us? How do you persuade these folks that our neighbors in far-off places have lots of good things to offer? How do you persuade folks that more liberal immigration policies would benefit all those involved?

Lecturing people about how their responses are driven by immoral actions (racism, for instance) or providing detailed instructions on how they should live their lives (yes, the welfare state does this) is usually not a good persuasion technique. Rather, we must transcend our usual interactions through openness and vulnerability in the idea that we have something to learn from other people.   

At the same time, both sides must stop demonizing policies that don’t necessarily fit their worldviews. The expansion of workfare brought on by the 1996 welfare reform law lifted incomes, reduced childhood poverty, and improved behavior associated with good health despite research suggesting that the opposite might happen. At the same time, public programs have been fairly effective at reducing poverty since the Great Society.

I believe that we would be better off by seeking to understand why people are hurt by looking towards our similarities. The important question is how can we work together to improve each other’s lives through service, sympathy, and reciprocal trade? How can we increase the diffusion of our good and unique gifts? And when there’s something getting in the way of any of these paths, how can we remove it?

About 1.8 Million People Live Within the D.C. Beltway

NASA’s Socioeconomic Data and Applications Center (SEDAC) at Columbia University has a neat web application that allows users to estimate population (based on data from 2015) and land area for any shape drawn on the map.

According to the application, there were about 1.824 million people living inside the beltway in Washington, D.C., in 2015. The land area inside the beltway is about 668 square kilometers (or about 258 square miles).

Meanwhile, the Capitol Hill neighborhood (as defined by Google Maps) has an estimated population of just under 14,000 in a land area of 3 square kilometers (1.2 square miles).

(Thanks to for pointing out this resource.)

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Are Individuals More Objectivist After Arguing to Win Rather Than to Learn?

That's the claim in a recent article published in Scientific American under the title "Tribalism of Truth." You can find it behind a paywall here

Here are a couple of interesting excerpts:

The divergence of Americans’ ideology is accompanied by an animosity for those across the aisle. Recent polls show that partisan liberals and conservatives associate with one another less frequently, have unfavorable views of the opposing party, and would even be unhappy if a family member married someone from the other side. At the same time, the rise of social media has revolutionized how information is consumed – news is often personalized to one’s political preferences. Rival perspectives can be completely shut out from one’s self-created media bubble. Making matters worse, outrage-inducing content is more likely to spread on these platforms, creating a breeding ground for click-bate headlines and fake news. The toxic online environment is very likely driving Americans further apart and fostering unproductive exchanges.

In this time of rising tribalism, an important question has arisen about the psychological effects of arguing to win. What happens in our minds – and to our minds – when we find ourselves conversing in a way that simply aims to defeat an opponent? Our recent research has explored this question using experimental methods, and we have found that the distinction between different modes of argument has some surprisingly far-reaching effects. Not only does it change people’s way of thinking about debate and the people on the opposing side, but it also has a more fundamental effect on our way of understanding the very issue under discussion.

We are, in essence, moving away from each other by turning from discussion to argument. We are drawing battle lines rather than moving to cooperate.

As I’ve suggested before, the ways in which we communicate is critical to our ability to sympathize. And this has significant implications for our ability to successfully self-govern.

The authors of this article suggest that discussing to learn generates more understanding between groups whereas arguing to win does the opposite.

Here’s more:

After the conversation [about a contentious issue] was over, we asked participants whether they thought there was an objective truth about the topics they had just debated. Strikingly, these 15-minute exchanges actually shifted people’s views. Individuals were more objectivist after arguing to win than they were after arguing to learn. In other words, the social context of the discussion – how people frame the purpose of controversial discourse – actually changed their opinions on the deeply philosophical question about whether there is an objective truth at all. 

DC is the Only Major Metro Area to Have More Economists than Chefs.

According to travel guru Rick Steves, there are three chefs for every lawyer in Paris. Well, in Washington, D.C., we have 15 lawyers for every chef, according to data compiled from the Bureau of Labor Statistics (BLS). The national average is only four lawyers to every chef.

Washington also seems to be full of economists. We have 10 economists for every one member of the clergy, whereas in New York City there are 15 members of the clergy for every economist.


Wisdom of Polarized Crowds

That’s the title of a newish article by a team of researchers at the University of North Carolina, Harvard University, and the University of Chicago.

Here’s the abstract:

As political polarization in the United States continues to rise, the question of whether polarized individuals can fruitfully cooperate becomes pressing. Although diversity of individual perspectives typically leads to superior team performance on complex tasks, strong political perspectives have been associated with conflict, misinformation and a reluctance to engage with people and perspectives beyond one’s echo chamber. It is unclear whether self-selected teams of politically diverse individuals will create higher or lower quality outcomes. In this paper, we explore the effect of team political composition on performance through analysis of millions of edits to Wikipedia’s Political, Social Issues, and Science articles. We measure editors’ political alignments by their contributions to conservative versus liberal articles. A survey of editors validates that those who primarily edit liberal articles identify more strongly with the Democratic party and those who edit conservative ones with the Republican party. Our analysis then reveals that polarized teams—those consisting of a balanced set of politically diverse editors—create articles of higher quality than politically homogeneous teams. The effect appears most strongly in Wikipedia’s Political articles, but is also observed in Social Issues and even Science articles. Analysis of article “talk pages” reveals that politically polarized teams engage in longer, more constructive, competitive, and substantively focused but linguistically diverse debates than political moderates. More intense use of Wikipedia policies by politically diverse teams suggests institutional design principles to help unleash the power of politically polarized teams.

Politically polarized teams with strong views tend to create content of higher quality relative to teams made of moderates or homogeneous teams.

Of course, Wikipedia is a forum for transparent discussion (you can see who edits what) and a confined outcome. There is one page for each topic rather than each page having a twin representing another perspective. There aren’t dedicated pages for “alternative facts” but rather a discussion over a set of statements/perspectives/facts that is likely converge on something closer to the truth under the right environment. 

Now is Not the Time to Bring Back Earmarks.

There are, essentially, four ways that the Federal government obligates money tied to grants. Broadly ("everyone gets a car"), through a formula (defined by law or through rulemaking), through competitive applications, and by giving it to whoever they want.

Broad-based grants are almost always expensive or wasteful. Formulas are almost always gamed and never transparent. The Administration can introduce non-transparent policy choices to the competitive applications. And when Congress doesn't earmark either directly or indirectly, the Administration’s decision on who to give the money to is far from independent of the political process.

A major problem historically with earmarks is that Members used them in a positive-sum environment where Member “X” would vote for everyone else's spending if they also voted for his/hers. Another problem with the earmarks is that the well-connected can slip them into the bills. However, the Administration does this last bit anyway in a much less transparent way under the earmark moratorium.

But earmarks in a zero-sum environment make some sense. That is, where you have strong spending caps and an open process in place that forces Members to transparently defend their earmarks against one another.

Under this environment, Members would be forced to defend their earmarks against one another and Congress would decide which projects are worthy depending on the budget. The problem is, of course, that Congress cannot be trusted to either defend a strict budget or implement an open process right now.

Bringing back earmarks will increase the pressure more than ever on the discretionary spending caps (i.e., “if we just get rid of the caps, everyone will get a car!”). And sure, growth in discretionary spending isn’t the problem (as I’ve written about here). But why should Congress be trusted with more money until they can demonstrate how serious they are about doing something the address the underlying causes of budget sustainability (more here)?

It’s also unlikely that we’re going to get an open process. For instance, the Chairman of the House Appropriations Committee wants Members to submit earmarks to his Committee for review. In other words, Leadership and the Appropriators will be picking the earmarks. That sounds like a terrible idea.

The President sees the earmark moratorium as a net negative because he wants Congress to grease its own wheels. But the earmark moratorium could, under its current construction, give the President a tremendous amount of power.

As I’ve written about in a previous post, there’s a potential loophole in the earmark moratorium that would allow for the practice if the request comes from the President. In other words, if the President formally requests the earmark (through an open letter to Congress or the annual budget) Congress can fund it at whatever level they choose.

This loophole doesn’t stop the gamesmanship. But it does increase the transparency of the process while adding an additional hurdle. That is, two branches of government have to explicitly agree that the earmark is a good idea. That’s not so easy. 

The ACA’s Cost Sharing Reduction Program and the CBO Baseline

Section 1402 of the Patient Protection and Affordable Care Act (ACA) establishes a program that was intended to reduce out-of-pocket costs for low-income people purchasing qualified health plans as defined by the law.

The program is intended to work like this.... The Department of Health and Human Services (HHS) pays the administrator of a qualified health plan (i.e., insurance companies) some amount of money to cover what would otherwise be out-of-pocket costs for individuals who enroll in a silver plan from the exchanges established by the law. If they enroll in the gold or bronze plan there is no subsidy.  

Silver plans have an actuarial value of 70 percent. That means that the plan will cover about 70 percent of the covered health care costs for the typical enrollee. The plan enrollee has to cover the rest in the form of deductibles, copays, etc. However, section 1402 of the ACA says that if you enroll in a silver plan and have an income between the poverty line and 150 percent of the poverty line, HHS will cover 80 percent of the 30 percent of costs not covered by the plan (this would bring the total actuarial value of the plan up to 94 percent). Likewise, HHS will cover 57 percent of your remaining out of pocket costs if your income is between 151 and 200 percent of the poverty line, and 10 percent of remaining costs if your income is between 201 and 250 percent of the poverty line. 

Silver plans (specifically the second lowest cost silver plan) are also used to determine the benchmark premiums used in setting the value of the premium assistance tax credits. This part is important. You'll want to remember this later on in the post. 

However, there was a big omission in the drafting of section 1402. Specifically, the law tells HHS to make the payment, but it doesn't tell them where to get the money to make the payment. In other words, it provides a direction to pay but not a source of payment. According to Federal appropriations law, both are needed in order to have an appropriation (source: GAO "Red Book").

Therefore, another bill would have to provide the appropriation. And without an appropriation HHS shouldn't be making obligations and insurance companies cannot get paid. Doing so would be in violation of the Antideficiency Act and unconstitutional (agencies cannot spend money without an appropriation). This is the argument at the core of the House's lawsuit. And in October, HHS stopped making payments after a review of the program concluded that the House was right.   

The timing of the payments ending allowed insurers to adjust their rates for 2018 to account for the lost cost sharing reduction payments under section 1402. This had several effects on the insurance market. First, insurers increased premiums for silver plans to drive up the benchmark premiums used to set the value of the premium assistance tax credits. This resulted in a number of areas with $0 premiums available for all qualifying individuals with incomes less than four times the poverty line. Preliminary information suggests that the number of enrollees in subsidized plans didn't change much between 2017 and 2018 -- a factor likely driven by the new $0 premiums. 

The Congressional Budget Office (CBO) anticipated many of these changes last summer when they produced an estimate of the budgetary effects of eliminating the cost sharing reduction payments. At the time, CBO estimated that eliminating the cost sharing subsidies would increase the deficit by $201 billion over ten years. This is because premium tax credits would get about $365 billion more expensive while the cost sharing reductions would cost $118 billion. 

However, the Administration’s decision to stop making the cost sharing reduction payments doesn’t necessarily indicate whether CBO will now remove the cost sharing reductions from the baseline. If CBO believes that the law creates an entitlement to the cost sharing reductions (this is different from deciding whether there is an appropriation) it may keep the payments in the mandatory baseline. Therefore, if Congress appropriates money for the program at some point in the future they will not get “credit” for reducing the deficit. Rather, Congress would simply legalize what CBO believes would happen anyway. 

If instead CBO believes that the law does not entitle the insurers to the payments and they are removed from the mandatory baseline, a new appropriation would score on paper as reducing the deficit by hundreds of billions of dollars. CBO will likely be taking imput from the House and Senate Budget Committees in helping to make this determination

The answer to the question will be extremely relevant if Congress looks to attach a new appropriation for the cost sharing reductions to a budget deal to lift the Budget Control Act spending caps later this month.  

Will This Be The Year Congress Ends the BCA?


The Sequester has become a proper noun to all in Washington and a bad word to many. The Sequester represents the popular notion of indiscriminate spending cuts that were enacted as part of a deal struck in the summer of 2011 between Biden and McConnell to raise the debt limit while preserving the “Boehner Rule” (i.e., trading $1 in deficit reduction for $1 in debt limit). However, The Sequester that most people think about isn’t really a sequester at all.

Sequestration is the cancelation of budget authority. Budget authority is one type of appropriation provided by Congress. However, the sequester that was triggered by the failure of the Joint Select Committee on Deficit Reduction (aka the “Super Committee”), and that everyone refers to, includes only a small cancelation of budget authority (about $17 billion a year). Most of the revision is either a reduction in spending limits or assumed debt service reductions.

The Budget Control Act brought back limits on discretionary spending that were in place from 1991 until 2002. After the Super Committee failed, these spending limits were reduced by $1.2 trillion – minus debt service and a small amount of deficit reduction achieved by special rules governing a mandatory sequester (this is the only sequester of The Sequester) – spread over the period covering 2013 to 2021 and split equally between defense and nondefense.

This comes out to an additional reduction in the discretionary spending limits of $54 for defense and $37 billion for nondefense applied each year until 2021. The difference in the two numbers is that nondefense has more to give through the mandatory sequester, but at the end of the day the cut is spread equally between the two categories.

The important distinction between these spending limit reductions and an actual sequester is that they are not as indiscriminate as most assume. Rather than an across-the-board reduction in budget authority, these reductions are targeted in appropriations bills passed by Congress. In other words, Congress decides how the additional spending limits are applied. But that doesn’t sound nearly as dramatic. 

Another important consideration here is that the $54 and $37 billion reductions in each category are off of the spending caps in defense and non-defense that were also set by the BCA. As a decent approximation of the total effect of the BCA it's worth revisiting the January 2011 CBO baseline that was published before the sequester. In 2017, real discretionary spending was about $220 billion lower than CBO projected it would be before BCA was enacted and about $24 billion lower than was predicted immediately after enactment. Therefore, relative to baseline adjustments (i.e., inflation) off of 2011 spending levels, real discretionary spending has fallen pretty dramatically. 

As previous posts have mentioned, over the next month budget observers should note how much any revision by Congress might end up being. Congress has never revised the BCA spending upwards in a way that would rollback the initial BCA caps. Congress has only amended the levels adjusted by the failure of the Super Committee. That could very well change this month.