A Central Banking Domino Effect Is in Motion

Policy U-turns from the Fed and ECB are cascading around the world

Abrupt changes in the policies of the world’s largest central banks have rippled through smaller economies, leaving them with the prospect of low and even negative interest rates for years to come despite having mostly healthy economies.

The danger is that these easy-money policies could fuel destabilizing bubbles in real estate and other asset markets. They may also leave banks with little ammunition to respond to the next economic downturn.

Economies like Switzerland’s, whose central bank signaled no change in its negative-rate policies for years to come, are small compared with the U.S. and eurozone. Still, they are home to major global banks and companies that are sensitive to exchange rates and financial conditions. With financial markets so interconnected, problems in small countries can quickly spread to larger ones.

.. The Swiss National Bank said Thursday that it would keep its policy rate at minus 0.75%, where it has been since January 2015, and reduced its inflation forecast to 0.3% this year and 0.6% in 2020. The SNB cited weaker overseas growth and inflation and “the resulting reduction in expectations regarding policy rates in the major currency areas going forward.”

.. Here’s why Fed and ECB decisions matter for countries that don’t use the dollar or euro: Switzerland and countries near the eurozone but not part of it—like Sweden and Denmark—rely on the bloc for much of their exports and imports. That makes growth and inflation highly dependent on the exchange rate. Central-bank stimulus tends to weaken a country’s exchange rate, so when the ECB embraces easy-money policies as it did two weeks ago it tends to weaken the euro against other European currencies such as the Swiss franc. Because the ECB is so large, Switzerland and others can do little to offset it.

.. “They are hostage to the fortunes of what the ECB does,” said David Oxley, economist at Capital Economics.

.. “The gravity pull is very strong” from the Fed and ECB, said Sebastien Galy, macro strategist at Nordea Asset Management. “The consequence is [non-euro central banks in Europe] mostly end up importing policy from the ECB, so you end up with housing bubbles and a misallocation of capital.”

The Ethical Dilemma Facing Silicon Valley’s Next Generation

Stanford has established itself as the epicenter of computer science, and a farm system for the tech giants. Following major scandals at Facebook, Google, and others, how is the university coming to grips with a world in which many of its students’ dream jobs are now vilified?

At Stanford University’s business school, above the stage where Elizabeth Holmes once regurgitated the myths of Silicon Valley, there now hangs a whistle splattered in blood. More than 500 people have gathered to hear the true story of Theranos, the $9 billion blood-testing company Holmes launched in 2004 as a Stanford dropout with the help of one of the school’s famed chemical engineering professors.

When Holmes was weaving the elaborate lies that ultimately led to the dissolution of her company, she leaned heavily on tech truisms that treat dogged pursuit of market domination as a virtue. “The minute that you have a backup plan, you’ve admitted that you’re not going to succeed,” she said onstage in 2015. But Shultz and Cheung, who faced legal threats from Theranos for speaking out, push back against the idea of pursuing a high-minded vision at all costs. “We don’t know how to handle new technologies anymore,” Cheung says, “and we don’t know the consequences necessarily that they’ll have.”

The words resonate in the jam-packed auditorium, where students line up afterward to nab selfies with and autographs from the whistleblowers. Kendall Costello, a junior at Stanford, idolized Holmes in high school and imagined working for Theranos one day. Now she’s more interested in learning how to regulate tech than building the next product that promises to change the world. “I really aspired to kind of be like her in a sense,” Costello says. “Then two years later, in seeing her whole empire crumble around her, in addition to other scandals like Facebook’s Cambridge Analytica and all these things that are coming forward, I was just kind of disillusioned.”

..But the endless barrage of negative news in tech, ranging from Facebook fueling propaganda campaigns by Russian trolls to Amazon selling surveillance software to governments, has forced Stanford to reevaluate its role in shaping the Valley’s future leaders. Students are reconsidering whether working at Google or Facebook is landing a dream job or selling out to craven corporate interests. Professors are revamping courses to address the ethical challenges tech companies are grappling with right now. And university president Marc Tessier-Lavigne has made educating students on the societal impacts of technology a tentpole of his long-term strategic plan.

As tech comes to dominate an ever-expanding portion of our daily lives, Stanford’s role as an educator of the industry’s engineers and a financier of its startups grows increasingly important. The school may not be responsible for creating our digital world, but it trains the architects. And right now, students are weighing tough decisions about how they plan to make a living in a world that was clearly constructed the wrong way. “To me it seemed super empowering that a line of code that I wrote could be used by millions of people the next day,” says Matthew Sun, a junior majoring in computer science and public policy, who helped organize the Theranos event. “Now we’re realizing that’s maybe not always a good thing.”

.. Because membership costs $21,000 per year, the career fairs tend to attract only the most renowned firms.

Honestly, I think they’re horrific,” says Vicki Niu, a 2018 Stanford graduate who majored in computer science. She recalls her first career fair being as hectic as a Black Friday sale, with the put-on exclusivity of a night club. (Students must present their Stanford IDs to enter the tent.) But like other freshmen, she found herself swept up in the pursuit of an internship at a large, prestigious tech firm. “Everybody is trying to get interviews at Google and Facebook and Palantir,” she says. “There’s all this hype around them. Part of my mind-set coming in was that I wanted to learn, but I think there was definitely also this big social pressure and this desire to prove yourself and to prove to people that you’re smart.”

Stanford’s computer science department has long been revered for its graduate programs—Google was famously built as a research project by Ph.D. students Larry Page and Sergey Brin—but the intense interest among undergrads is relatively new. In 2007, the school conferred more bachelor’s degrees in English (92) than computer science (70). The next year, though, Stanford revamped its CS curriculum from a one-size-fits-all education to a more flexible framework that funneled students along specialized tracks such as graphics, human-computer interaction, and artificial intelligence. “We needed to make the major more attractive, to show that computer science isn’t just sitting in a cube all day,” Mehran Sahami, a computer science professor who once worked at Google, said later.

The change in curriculum coincided with an explosion of wealth and perceived self-importance in the Valley. The iPhone opened up the potential for thousands of new businesses built around apps, and when its creator died he earned rapturous comparisons to Thomas Edison. Facebook emerged as the fastest-growing internet company of all time, and the Arab Spring made its influence seem benign rather than ominous. As the economy recovered from the recession, investors decided to park their money in startups like Uber and Airbnb that might one day become the next Google or Amazon. A 2013 video by the nonprofit Code.org featured CEOs, Chris Bosh, and will.i.am comparing computer programmers to wizards, superheroes, and rock stars.

Stanford and its students eagerly embraced this cultural shift. John Hennessy, a computer science professor who became president of the university from 2000 to 2016, served on Google’s board of directors and is now the executive chairman of Google parent company Alphabet. LinkedIn founder and Stanford alum Reid Hoffman introduced a new computer science course called Blitzscaling and brought in high-profile entrepreneurs to teach students how to “build massive organizations, user bases, and businesses, and to do so at a dizzyingly rapid pace.” (Elizabeth Holmes was among the speakers.) Mark Zuckerberg became an annual guest in Sahami’s popular introductory computer science class. “It just continued to emphasize how privileged Stanford students are in so many ways, that we have the CEO of Facebook taking time out of his day to come talk to us,” says Vinamrata Singal, a 2016 graduate who had Zuckerberg visit her class freshman year. “It felt really surreal and it did make me excited to want to continue studying computer science.”

In 2013, Stanford began directly investing in students’ companies, much like a venture capital firm. Even without direct Stanford funding, the school’s proximity to wealth helped plenty of big ideas get off the ground. Evan Spiegel, who was a junior at Stanford in 2011 when he started working on Snapchat, connected with his first investor via a Stanford alumni network on Facebook. “Instead of starting a band or trying to make an independent movie or blogging, people would get into code,” says Billy Gallagher, a 2014 graduate who was the editor-in-chief of the school newspaper. “It was a similar idea to, ‘Here’s our band’s vinyl or our band’s tape. Come see us play.’”

..But it’s not just that coding was a creative outlet, as is often depicted in tech origin stories. Working at a big Silicon Valley company also became a path to a specific kind of upper-crust success that students at top schools are groomed for. “Why do so many really bright young kids go into consulting and banking?” asks Gallagher. “They’re prestigious so your parents can be proud of you, they pay really well, and they put you on a career path to open up new doors. Now we’re seeing that’s happening a lot with Google and Facebook.”

By the time Niu arrived in 2014, computer science had become the most popular major on campus and 90 percent of undergrads were taking at least one CS course. As a high schooler, her knowledge of Silicon Valley didn’t extend much further than The Internship, a Vince Vaughn–Owen Wilson comedy about working at Google that doubled as a promotional tool for the search giant. She soon came to realize that landing a job at one of the revered tech giants or striking it rich with an app were Stanford’s primary markers of success. Her coursework was largely technical, focusing on the process of coding and not so much on the outcomes. And in the rare instances when Niu heard ethics discussed in class, it was often framed around the concerns of tech’s super-elite, like killer robots destroying humanity in the future. “In my computer science classes and just talking to other people who were interested in technology, it didn’t seem like anybody really cared about social impact,” she says. “Or if they did, they weren’t talking about it.”

In the spring of her freshman year, Niu and two other students hosted a meeting to gauge interest in a new group focused on socially beneficial uses of technology. The computer science department provided funding for red curry and pad thai. Niu was shocked when the food ran out, as more than 100 students showed up for the event. “Everybody had the same experience: ‘I’m a computer science student. I’m doing this because I want to create an impact. I feel like I’m alone.’”

From this meeting sprang the student organization CS + Social Good. It aimed to expose students to professional opportunities that existed outside the tech giants and the hyperaggressive startups that aspired to their stature. In its first year, the group developed new courses about social-impact work, brought in speakers to discuss positive uses of technology, and offered summer fellowships to get students interning at nonprofits instead of Apple or Google. Hundreds of students and faculty engaged with the organization’s programming.

In Niu’s mind, “social good” referred mainly to the positive applications of technology. But stopping bad uses of tech is just as important as promoting good ones. That’s a lesson the entire Valley has been forced to reckon with as its benevolent reputation has unraveled. “Most of our programming had been, ‘Look at these great ways you can use technology to help kids learn math,’” Niu says. “There was this real need to not only talk about that, but to also be like, ‘It’s not just that technology is neutral. It can actually be really harmful.’”

Many students find it difficult to pinpoint a specific transgression that flipped their perception of Silicon Valley, simply because there have been so many.

The torrid pace of bad news has been jarring for students who entered school with optimistic views of tech. Nichelle Hall, a senior majoring in computer science, viewed Google as the ideal landing spot for an aspiring software engineer when she started college. “I associated it so much with success,” she says. “It’s the first thing I thought about when I thought about technology.” But when she was offered an on-site interview for a potential job at the search giant in the fall, she declined. Project Dragonfly, Google’s (reportedly abandoned) effort to bring a censored search engine to China, gave her pause. It wasn’t just that she objected to the idea on principle. She sensed that working for such a large corporation would likely put her personal morals and corporate directives in conflict. “They say don’t do evil and then they do things like that,” she says. “I wasn’t really into the big-company idea for that reason. … You don’t necessarily know what the intentions of your executives are.”

  • ..Google has hardly been the most damaged brand during the techlash. (The company says it has not seen a year-over-year decline in Stanford recruits to this point.)
  • Students repeatedly bring up Facebook as a company that’s fallen out of favor.
  • Uber, with its cascade of controversies, now has to “fight to try and get people in,” according to junior Jose Giron.
  • And Palantir, the secretive data-mining company started by Stanford alum Peter Thiel, has also lost traction due to Thiel’s ties to Trump and worries that the company could help the president develop tech to advance his draconian immigration policies. “There’s a growing concern over your personal decision where to work after graduation,” Sun says.

There’s a lot of personal guilt around pursuing CS. If you do that, people call you a sellout or you might view yourself as a sellout. If you take a high-paying job, people might say, ‘Oh, you’re just going to work for a big tech company. All you care about is yourself.’”

Landing a job at a major tech firm is often as much about prestige as passion, which is one reason the CS major has expanded so dramatically. But a company’s tarnished reputation can transfer to its employees. Students debate whether fewer of their peers are actually taking gigs at Facebook, or whether they’re just less vocal in bragging about it. At lunch at a Burmese restaurant on campus, Hall and Sun summed up the transition succinctly. “No one’s like, ‘I got an internship at Uber!’” Sun says. Hall follows up: “They’re like, ‘I got an internship … at Uber …’”

The concerns are bigger than which companies rise or fall in the estimation of up-and-coming engineers. Stanford and computer science programs across the country may not be adequately equipped to wade through the ethical minefield that is expanding along with tech’s influence. Sahami acknowledges that many computer science classes are designed to teach students how to solve technical problems rather than to think about the real-world issues that a solution might create. Part of the challenge comes from computer science being a young discipline compared to other engineering fields, meaning that practical examples of malpractice are emerging in real time from today’s headlines.

Vik Pattabi, a senior majoring in computer science, originally studied mechanical engineering. In those classes, students are constantly reminded of the 1940 collapse of Tacoma Narrows Bridge: A modern marvel was destroyed because its highly educated engineers did not foresee all the possible threats to their creation (in that case, the wind). Pattabi’s CS coursework hasn’t yet included a comparable example. “A lot of the second- and third-order effects that we see [in] Silicon Valley have happened in the last two or three years,” Pattabi says. “The department is trying to react as fast as it can, but they don’t have 30 years of case studies to work with.”

Another issue is the longstanding divide on campus between the engineering types—known as “techies”—and the humanities or social sciences majors, known as “fuzzies.” Though the school has focused more on interdisciplinary studies in recent years, there remains a gap in understanding that’s often filled in by stereotype. This sort of divide is a common aspect of college life, but the stakes feel higher when some of the students will one day be programming the algorithms that govern the digital world. “There’s things [said] like, ‘You can’t spell fascist without CS.’ People will tell you things like that,” Hall says. “I think people may feel antagonized.”

The school’s deep ties to the Bay Area’s corporate giants, long a much-touted recruitment tool, suddenly look different in light of the problems that the industry has created. At the January career fair, members of Students for the Liberation of All Peoples (SLAP), an activist group on campus that aims to disrupt Stanford’s “culture of apathy,” handed out flyers that urged students not to work at Amazon and Salesforce because of their commercial ties to ICE and the United States Border Patrol. (Employees at the companies have raised similar concerns.) “REFUSE to be part of the Stanford → racist tech pipeline,” the flyer reads, in part.

Two students in the group said they were asked to leave the career fair by Computer Forum officials. When the students refused to comply, they say they were escorted out by campus police under threat of arrest for disrupting a private event. A Stanford spokesperson confirmed the incident. “The protesting students were disruptive and asked by police to leave,” the spokesperson said in an emailed statement. “The students were given the option to protest outside the event or in White Plaza. They chose to leave.”

For members of SLAP, the exchange reinforced the ways in which Stanford institutionally and culturally cuts itself off from the issues occurring in the real world. “You might hear this idea of the ‘Stanford bubble,’ where Stanford students kind of just stay on campus and they just do what they need to do for their classes and their jobs,” says Kimiko Hirota, a SLAP member and junior majoring in sociology and comparative studies in race and ethnicity, who participated in the career fair protest. She said many of the students she talked to had no idea about the tech firms’ government contracts. “To me the amount of students on campus that are politically engaged and are actively using their Stanford privilege for a greater good is extremely small.”

The computer science major includes a “technology in society” course requirement that can be fulfilled by a number of ethics classes, and teaching students about their ethical responsibilities is a component of the department’s accreditation process. CS + Social Good has expanded its footprint on campus, teaching more classes and organizing more events like the Theranos talk starring the whistleblowers. Yet the flexibility of the CS major cuts both ways. It means that students who care to take a holistic approach to the discipline can combine rigorous training in code with an education in ethics; it also means that it remains all too easy for some students to avoid engaging with the practical ramifications of their work. “You can very much come to Stanford feeling very apathetic about the impact of the technology and leave just that way without any effort,” Hall says. “I don’t feel as though we are forced to encounter the impact.”

On a Wednesday afternoon, students spill into a lobby in front of a standing-room-only auditorium in the School of Education, where Jeremy Weinstein is talking about the promise and perils of using algorithms in criminal justice. Next year Californians will vote on a bill that would replace cash bail with a computerized risk-assessment system that calculates an arrested person’s likelihood of returning for a court appearance. The idea is to give people who can’t afford to make bail another way to get out of jail through a fairer policy. But such algorithms have been found to reinforce racial biases in the criminal justice system, according to a ProPublicainvestigation. Instead of being a solution to an unfair process, poorly implemented software could create an entirely new form of systemic discrimination. Students were asked to vote on whether they supported cash bail or the algorithm. The class was evenly split. Unlike in most CS classes, Weinstein could not offer students the comfort of a “correct” answer. “We need to deconstruct these algorithms in order to help people see that technology is not just something to be trusted,” he says. “It’s not just something that’s objective and fair because it’s numerical, but it actually reflects a set of choices that people make.”

Though Weinstein is a political science professor, he’s one of three educators leading the new version of the CS department’s flagship ethics course, CS181. Teaching with him are Sahami, the computer science professor, and Rob Reich, a political science professor and philosopher. The trio devised the course structure over a series of coffee-fueled meetings as the tech backlash unfolded during the past year and a half. After discussing algorithmic bias, the class will explore privacy in the age of facial recognition, the social impacts of autonomous technology, and the responsibilities of private platforms in regard to free speech. The coursework is meant to be hands-on. During the current unit, students must build their own risk-assessment algorithm using an actual criminal history data set, then assess it for fairness. “We run it like a talk show,” Weinstein says. “There’s a lot of call-and-response, asking questions, getting people to talk in small groups.”

While Stanford’s computer science program has had an ethics component for decades, this course marks the first time that experts in other fields are so directly involved in the curriculum. About 300 students have enrolled in the course, including majors in history, philosophy, and biology. It provides an opportunity for the techies and fuzzies to learn from one another, and for professors removed from the Valley’s tech culture to contextualize the industry’s societal impacts. In the course overview materials, the moral reckoning occurring in the tech sector today is compared to the advent of the nuclear bomb.

The course’s popularity is a sign that the gravity of the moment is weighing on many Stanford minds. Antigone Xenopoulos, a junior majoring in symbolic systems (a techie-fuzzie hybrid major that incorporates computer science, linguistics, and philosophy), is a research assistant for CS181. She wasn’t the only student who quoted a line from Spider-Man to me—with great power comes great responsibilitywhen referencing the current landscape. “If they’re going to give students the tools to have such immense influence and capabilities, [Stanford] should also guide those students in developing ethical compasses,” she says.

 ..While the early years of the decade saw prominent tech executives like Holmes and Zuckerberg teaching students how to lifehack their way to success, the new ethics course will bring in guest speakers from WhatsApp, Facebook, and the NSA to answer “hard questions,” Sahami says “I wouldn’t say industry is influencing Stanford,” he says. “I would say the relationship with industry allows us to have more authentic conversations where we’re really bringing in people who are decision-makers in these areas.”
.. Some of the more critical voices from within the industry are also taking on more permanent roles at Stanford. Alex Stamos, the former chief security officer at Facebook, taught a “hack lab” for non-CS majors last fall, helping them understand cybersecurity threats. He’s now developing a more advanced computer science course, to be piloted later this year, that explores trust and safety issues in the era of misinformation and widespread online harassment. Stamos led Facebook’s internal investigation into Russian political interference on the platform and clashed with top executives over how much of that information should be made public. He left the company in August to join Stanford, where he hopes to impart lessons from his time battling a digital attack that was waged not through hacking, but through ad purchases, incendiary memes, and politically charged Facebook events. “One of the things we don’t teach computer science students is all of the non-technically advanced abuses of technology that cause real harm,” Stamos says. “I want to expose students to [things like], ‘These are the mistakes that were made before, these are the kinds of problems that existed, and these are the company’s reactions to those mistakes.’”

Stamos rejects the idea that ethics is the correct framework to think about addressing tech’s most pressing issues. “The problem here is not that people are making decisions that are straight-up evil,” he says. “The problem is that people are not foreseeing the outcomes of their actions. Part of that is a lack of paranoia. One of our problems in Silicon Valley is we build products to be used the right way. … It’s hard to envision all the misuses unless you understand all the things that have come before.”

While he says that Stanford bears some responsibility for the Valley’s tunnel vision, he praises the school for welcoming tech leaders with recent, relevant experiences to help students prepare for emerging threats. “When I was going to school, computers were important, but we weren’t talking about building companies that might change history,” Stamos says. “The students who come to me are really interested in the impact of what they do on society.”

Stamos regularly fields questions from students about whether to work at Facebook or Google. He tells them that they should, not in spite of the companies’ mounting issues, but because of them.If you actually care about making communication technologies compatible with democracy, then the place to be is at one of the companies that actually has the problems,” he says. “Not working at the big places that could actually solve it does not make things better.”

The tech giants continue to consolidate power even as they face withering criticism. Facebook’s user base growth accelerated last quarter despite its scandals. Uber will go public this year at a valuation as high as $120 billion. Apple, Amazon, and Google are all planning to open large new offices around the country in the near future. And for all the optimistic talk of working at ethically minded startups among students, creation of nascent businesses is at roughly a 40-year low in the United States. Small firms that enter the terrain of the Frightful Five are typically acquired or destroyed.

It is hard to find a Stanford computer science student, even among the ethically minded set CS + Social Good has helped cultivate, who will publicly proclaim that they’ll never work for one of these dominant companies, as all of them offer opportunities for high pay, engaging individual work, and comforting job security. International students have to worry about securing work visas however they can; students on financial aid may need to make enough money to support other family members. And for many others, it’s not clear that anything that’s happened in the Valley is truly beyond the pale. In that sense, the engineers are just like us, aghast at the headlines but still clicking away inside a system that’s come to feel inescapable. “These events feel too big for most students to take into account,” says Jason He, a master’s student in electrical engineering. “At the end of the day, I think for a lot of students who have been paying a lot of money for their education, if the six-figure salary is offered, it’s pretty hard for students to turn down.”

There is still an opportunity, the thinking at Stanford goes, for every company to do good. Nichelle Hall, the senior who declined the Google interview, landed a job working on Medium’s trust and safety team. But she recognizes that she may have set her qualms aside if Google had been her only employment option. “Some of the feedback that CS + Social Good gets is, ‘Oh, the members end up working for Facebook, they end up working for Google,’” says Hall, who’s been involved with the organization since 2017. “People who care about this intersection of social impact and computer science will go to these companies and do a better job than if they weren’t interested in this stuff.”

Impact is the word that I heard more than any other while on campus. It’s how students framed their decision to go to Stanford, to pursue a career in computer science, to do good in the world after graduating. It’s a word that Hoffman used to describe his Blitzscaling class, and one Holmes used to explain to students why she dropped out of school. “I had the tools that I needed to be able to go out and begin making this impact,” she said. It’s the currency of Silicon Valley, that people spend for good and for ill.

The ability to create impact with a few lines of code has long been what separated software engineers from the rest of us, and turned the Valley into a self-proclaimed utopia of young rebels using technology to save the world from its older, antiquated self. But that’s not the image anymore. Now aspiring engineers draw a comparison between their chosen profession and investment banking. The finance industry wrecked the world a decade ago because of its misunderstanding of complex, automated systems that spun out of control—and its confidence that someone else would ultimately pay the price if things went wrong. You see this confidence in Zuckerberg’s incredulous response when anyone suggests that he resign, and in Google CEO Sundar Pichai’s initial refusal to testify before Congress. And you can see it at Stanford, where the endowment has never been higher, the fundraising has never been easier, and the career fair is still filled with slogans vowing to make the world a better place.

Perhaps this entire strip of land known as the Valley will fully calcify into a West Coast Wall Street, where the people with all the insider knowledge profit off the muppets who can’t stop using their products. If today’s young tech skeptics turn to cynics when they enter the working world, such a future is easy to imagine. But—and this is the hopeful, intoxicating, dangerous thing about technology—there’s always bright minds out there who think they can build a solution that just might fix this mess we’ve made. And people, especially young people, will always be enthralled by the romance of a new idea. “We’re creating things that haven’t necessarily existed before, and so we won’t be able to anticipate all the challenges that we have,” says Hall, who graduates in just four months. “But once we do, it’s important that we can reconcile them with grace and humility. I’m sure it will be a hard job, but it’s important that it’s hard. I’m up for the challenge.”

Another epic economic collapse is coming

.. the contraction probably will begin with the annual budget deficit exceeding $1 trillion.

.. The president’s Office of Management and Budget — not that there really is a meaningful budget getting actual management — projects that the deficit for fiscal 2019, which begins in six weeks, will be $1.085 trillion. This is while the economy is, according to the economic historian in the Oval Office, “as good as it’s ever been, ever.”

.. The fastest — 13.4 percent — was 1950’s fourth quarter, perhaps produced largely by bad news: The Cold War was on, the Korean War had begun in June, and fear of the atomic bomb was rising (New York City installed its first air-raid siren in October), as was (consequently) a home-building boom outside cities and “scare buying” of products that might become scarce during World War III.

.. Today, Shiller says, “it seems likely that people in many countries may be accelerating their purchases — of soybeans, steel and many other commodities — fearing future government intervention in the form of a trade war.” And fearing the probable: higher interest rates.

.. Jerome H. Powell, chairman of the Federal Reserve, says fiscal policy is on an “unsustainable path,” but such warnings are audible wallpaper — there but not noticed. The word “unsustainable” in fiscal rhetoric is akin to “unacceptable” in diplomatic parlance, where it usually refers to a situation soon to be accepted.
.. A recent International Monetary Fund analysis noted that among advanced economies, only the United States expects an increase in the debt-to-GDP ratio over the next five years.

.. among those economies, ours is performing especially well. What, however, if this is significantly an effect of exploding debt? Publicly held U.S. government debt has tripled in a decade.

.. the political class is more united by class interest than it is divided by ideology. From left to right, this class has a permanent incentive to run enormous deficits — to charge, through taxation, current voters significantly less than the cost of the government goods and services they consume, and saddle future voters with the cost of servicing the resulting debt after the current crop of politicians has left the scene.

.. This crop derives its political philosophy from the musical “Annie”: Tomorrow is always a day away. For normal people, however, the day after tomorrow always arrives.

I Can Tolerate Anything Except the Outgroup

Later, it comes out that the beloved nobleman did not in fact kill his good-for-nothing brother. The good-for-nothing brother killed the beloved nobleman (and stole his identity). Now the townspeople want to see him lynched or burned alive, and it is only the priest who – consistently – offers a measured forgiveness conditional on penance and self-reflection.

The priest tells them:

It seems to me that you only pardon the sins that you don’t really think sinful. You only forgive criminals when they commit what you don’t regard as crimes, but rather as conventions. You forgive a conventional duel just as you forgive a conventional divorce. You forgive because there isn’t anything to be forgiven.

.. He further notes that this is why the townspeople can self-righteously consider themselves more compassionate and forgiving than he is. Actual forgiveness, the kind the priest needs to cultivate to forgive evildoers, is really really hard. The fake forgiveness the townspeople use to forgive the people they like is really easy, so they get to boast not only of their forgiving nature, but of how much nicer they are than those mean old priests who find forgiveness difficult and want penance along with it.

.. There are a lot of people who say “I forgive you” when they mean “No harm done”, and a lot of people who say “That was unforgiveable” when they mean “That was genuinely really bad”.

.. But since forgiveness is generally considered a virtue, and one that many want credit for having, I think it’s fair to say you only earn the right to call yourself ‘forgiving’ if you forgive things that genuinely hurt you.

.. To borrow Chesterton’s example, if you think divorce is a-ok, then you don’t get to “forgive” people their divorces, you merely ignore them.

..  “Master, I have been tolerant of innumerable gays, lesbians, bisexuals, asexuals, blacks, Hispanics, Asians, transgender people, and Jews. How many Virtue Points have I earned for my meritorious deeds?”

Bodhidharma answers: “None at all”.

The Emperor, somewhat put out, demands to know why.

Bodhidharma asks: “Well, what do you think of gay people?”

The Emperor answers: “What do you think I am, some kind of homophobic bigot? Of course I have nothing against gay people!”

And Bodhidharma answers: “Thus do you gain no merit by tolerating them!”

.. If I had to define “tolerance” it would be something like “respect and kindness toward members of an outgroup”.

.. We have a lot of people – like the Emperor – boasting of being able to tolerate everyone from every outgroup they can imagine, loving the outgroup, writing long paeans to how great the outgroup is, staying up at night fretting that somebody else might not like the outgroup enough.

This is really surprising. It’s a total reversal of everything we know about human psychology up to this point. No one did any genetic engineering. No one passed out weird glowing pills in the public schools. And yet suddenly we get an entire group of people who conspicuously promote and defend their outgroups, the outer the better.

..  Any theory of outgroupishness that naively assumes the Nazis’ natural outgroup is Japanese or Chinese people will be totally inadequate.

.. So what makes an outgroup? Proximity plus small differences.

.. If you want to know who someone in former Yugoslavia hates, don’t look at the Indonesians or the Zulus or the Tibetans or anyone else distant and exotic. Find the Yugoslavian ethnicity that lives closely intermingled with them and is most conspicuously similar to them, and chances are you’ll find the one who they have eight hundred years of seething hatred toward.

.. eight hundred years of the British committing genocide against the Irish and considering them literally subhuman turned into smiles and songs about shamrocks once the Irish started looking like useful cannon fodder for a larger fight.

.. outgroups may be the people who look exactly like you, and scary foreigner types can become the in-group on a moment’s notice when it seems convenient.

..  46% of Americans are creationists. Not just in the sense of believing God helped guide evolution. I mean they think evolution is a vile atheist lie and God created humans exactly as they exist right now. That’s half the country.

.. And I don’t have a single one of those people in my social circle.

.. About forty percent of Americans want to ban gay marriage. I think if I really stretch it, maybe ten of my top hundred fifty friends might fall into this group. This is less astronomically unlikely; the odds are a mere one to one hundred quintillion against.

.. there was a thread on Reddit asking – Redditors Against Gay Marriage, What Is Your Best Supporting Argument? A Reddit user who didn’t understand how anybody could be against gay marriage honestly wanted to know how other people who were against it justified their position. He figured he might as well ask one of the largest sites on the Internet, with an estimated user base in the tens of millions.

It soon became clear that nobody there was actually against gay marriage.

.. In a thread with 10,401 comments, a thread specifically asking for people against gay marriage, I was eventually able to find two people who came out and opposed it, way near the bottom. Their posts started with “I know I’m going to be downvoted to hell for this…”

.. Only one percent of LWers were normal everyday God-‘n-guns-but-not-George-III conservatives of the type that seem to make up about half of the United States.

.. similar to other elite universities, had a faculty and a student body that skewed about 90-10 liberal to conservative – and we can bet that, like LW, even those few token conservatives are Mitt Romney types rather than God-n’-guns types. I get my news from vox.com, an Official Liberal Approved Site. Even when I go out to eat, it turns out my favorite restaurant, California Pizza Kitchen, is the most liberal restaurant in the United States.

.. I have created an outrageously strong bubble, a 10^45 bubble. Conservatives are all around me, yet I am about as likely to have a serious encounter with one as I am a Tibetan lama.

(Less likely, actually. One time a Tibetan lama came to my college and gave a really nice presentation, but if a conservative tried that, people would protest and it would be canceled.)

.. One day I realized that entirely by accident I was fulfilling all the Jewish stereotypes.

I’m nerdy, over-educated, good with words, good with money, weird sense of humor, don’t get outside much, I like deli sandwiches. And I’m a psychiatrist, which is about the most stereotypically Jewish profession short of maybe stand-up comedian or rabbi.

I’m not very religious. And I don’t go to synagogue. But that’s stereotypically Jewish too!

.. The defining factors of Judaism – Torah-reading, synagogue-following, mother-having – are the tip of a giant iceberg. Jews sometimes identify as a “tribe”, and even if you don’t attend synagogue, you’re still a member of that tribe and people can still (in a statistical way) infer things about you by knowing your Jewish identity – like how likely they are to be psychiatrists.

.. The Red Tribe is most classically typified by conservative political beliefs, strong evangelical religious beliefs, creationism, opposing gay marriage, owning guns, eating steak, drinking Coca-Cola, driving SUVs, watching lots of TV, enjoying American football, getting conspicuously upset about terrorists and commies, marrying early, divorcing early, shouting “USA IS NUMBER ONE!!!”, and listening to country music.

.. The Blue Tribe is most classically typified by liberal political beliefs, vague agnosticism, supporting gay rights, thinking guns are barbaric, eating arugula, drinking fancy bottled water, driving Priuses, reading lots of books, being highly educated, mocking American football, feeling vaguely like they should like soccer but never really being able to get into it, getting conspicuously upset about sexists and bigots, marrying later, constantly pointing out how much more civilized European countries are than America, and listening to “everything except country”.

.. (There is a partly-formed attempt to spin off a Grey Tribe typified by libertarian political beliefs, Dawkins-style atheism, vague annoyance that the question of gay rights even comes up, eating paleo, drinking Soylent, calling in rides on Uber, reading lots of blogs, calling American football “sportsball”, getting conspicuously upset about the War on Drugs and the NSA, and listening to filk – but for our current purposes this is a distraction and they can safely be considered part of the Blue Tribe most of the time)

.. And I genuinely believed that day that I had found some unexpected good in people – that everyone I knew was so humane and compassionate that they were unable to rejoice even in the death of someone who hated them and everything they stood for.

.. Then a few years later, Margaret Thatcher died. And on my Facebook wall – made of these same “intelligent, reasoned, and thoughtful” people – the most common response was to quote some portion of the song “Ding Dong, The Witch Is Dead”.

.. You can talk all you want about Islamophobia, but my friend’s “intelligent, reasoned, and thoughtful people” – her name for the Blue Tribe – can’t get together enough energy to really hate Osama, let alone Muslims in general. We understand that what he did was bad, but it didn’t anger us personally. When he died, we were able to very rationally apply our better nature and our Far Mode beliefs about how it’s never right to be happy about anyone else’s death.

On the other hand, that same group absolutely loathed Thatcher. Most of us (though not all) can agree, if the question is posed explicitly, that Osama was a worse person than Thatcher. But in terms of actual gut feeling? Osama provokes a snap judgment of “flawed human being”, Thatcher a snap judgment of “scum”.

.. I started this essay by pointing out that, despite what geographical and cultural distance would suggest, the Nazis’ outgroup was not the vastly different Japanese, but the almost-identical German Jews.

And my hypothesis, stated plainly, is that if you’re part of the Blue Tribe, then your outgroup isn’t al-Qaeda, or Muslims, or blacks, or gays, or transpeople, or Jews, or atheists – it’s the Red Tribe.

.. One of the ways we know that racism is a giant all-encompassing social factor is the Implicit Association Test. Psychologists ask subjects to quickly identify whether words or photos are members of certain gerrymandered categories, like “either a white person’s face or a positive emotion” or “either a black person’s face and a negative emotion”.

.. If subjects have more trouble (as measured in latency time) connecting white people to negative things than they do white people to positive things, then they probably have subconscious positive associations with white people.

.. what the test famously found was that even white people who claimed to have no racist attitudes at all usually had positive associations with white people and negative associations with black people on the test.

.. there have been several studies where people sent out a bunch of identical resumes except sometimes with a black person’s photo and other times with a white person’s photo, and it was noticed that employers were much more likely to invite the fictional white candidates for interviews.

.. Once again, discrimination on the basis of party was much stronger than discrimination on the basis of race.

.. People have been studying “belief congruence theory” – the idea that differences in beliefs are more important than demographic factors in forming in-groups and outgroups – for decades.

.. people were more likely to accept friendships across racial lines than across beliefs

.. One of the best-known examples of racism is the “Guess Who’s Coming To Dinner” scenario where parents are scandalized about their child marrying someone of a different race. Pew has done some good work on this and found that only 23% of conservatives and 1% (!) of liberals admit they would be upset in this situation. But Pew also asked how parents would feel about their child marrying someone of a different political party. Now 30% of conservatives and 23% of liberals would get upset.

.. I’m not saying people of either party have it “worse” than black people, or that partyism is more of a problem than racism, or any of a number of stupid things along those lines which I am sure I will nevertheless be accused of believing. Racism is worse than partyism because the two parties are at least kind of balanced in numbers and in resources, whereas the brunt of an entire country’s racism falls on a few underprivileged people.

.. Every election cycle like clockwork, conservatives accuse liberals of not being sufficiently pro-America. And every election cycle like clockwork, liberals give extremely unconvincing denials of this.

.. My hunch – both the Red Tribe and the Blue Tribe, for whatever reason, identify “America” with the Red Tribe. Ask people for typically “American” things, and you end up with a very Red list of characteristics – guns, religion, barbecues, American football, NASCAR, cowboys, SUVs, unrestrained capitalism.

.. That means the Red Tribe feels intensely patriotic about “their” country, and the Blue Tribe feels like they’re living in fortified enclaves deep in hostile territory.

.. Here is a popular piece published on a major media site called America: A Big, Fat, Stupid Nation. Another: America: A Bunch Of Spoiled, Whiny Brats. Americans are ignorant, scientifically illiterate religious fanatics whose “patriotism” is actually just narcissism. You Will Be Shocked At How Ignorant Americans Are, and we should Blame The Childish, Ignorant American People.

Needless to say, every single one of these articles was written by an American and read almost entirely by Americans. Those Americans very likely enjoyed the articles very much and did not feel the least bit insulted.

.. But I think the situation with “white” is much the same as the situation with “American” – it can either mean what it says, or be a code word for the Red Tribe.

.. Imagine hearing that a liberal talk show host and comedian was so enraged by the actions of ISIS that he’d recorded and posted a video in which he shouts at them for ten minutes, cursing the “fanatical terrorists” and calling them “utter savages” with “savage values”.

If I heard that, I’d be kind of surprised. It doesn’t fit my model of what liberal talk show hosts do.

.. That fits my model perfectly. You wouldn’t celebrate Osama’s death, only Thatcher’s. And you wouldn’t call ISIS savages, only Fox News. Fox is the outgroup, ISIS is just some random people off in a desert. You hate the outgroup, you don’t hate random desert people.

.. Not only does Brand not feel much like hating ISIS, he has a strong incentive not to. That incentive is: the Red Tribe is known to hate ISIS loudly and conspicuously. Hating ISIS would signal Red Tribe membership, would be the equivalent of going into Crips territory with a big Bloods gang sign tattooed on your shoulder.

.. What would Russell Brand answer, if we asked him to justify his decision to be much angrier at Fox than ISIS?

He might say something like “Obviously Fox News is not literally worse than ISIS. But here I am, talking to my audience, who are mostly white British people and Americans. These people already know that ISIS is bad; they don’t need to be told that any further. In fact, at this point being angry about how bad ISIS is, is less likely to genuinely change someone’s mind about ISIS, and more likely to promote Islamophobia. The sort of people in my audience are at zero risk of becoming ISIS supporters, but at a very real risk of Islamophobia. So ranting against ISIS would be counterproductive and dangerous.

.. So here’s somewhere I have a genuine chance to reach people at risk and change minds. Therefore, I think my decision to rant against Fox News, and maybe hyperbolically say they were ‘worse than ISIS’ is justified under the circumstances.”

.. But my sympathy with Brand ends when he acts like his audience is likely to be fans of Fox News.

.. In a world where a negligible number of Redditors oppose gay marriage and 1% of Less Wrongers identify conservative and I know 0/150 creationists, how many of the people who visit the YouTube channel of a well-known liberal activist with a Che-inspired banner, a channel whose episode names are things like “War: What Is It Good For?” and “Sarah Silverman Talks Feminism” – how many of them do you think are big Fox News fans?

.. If he attacked ISIS, his viewers would just be a little confused and uncomfortable. Whereas every moment he’s attacking Fox his viewers are like “HA HA! YEAH! GET ‘EM! SHOW THOSE IGNORANT BIGOTS IN THE OUTGROUP WHO’S BOSS!”

.. Brand acts as if there are just these countries called “Britain” and “America” who are receiving his material. Wrong. There are two parallel universes, and he’s only broadcasting to one of them.

.. Think of Brendan Eich as a member of a tiny religious minority surrounded by people who hate that minority. Suddenly firing him doesn’t seem very noble.

.. If you mix together Podunk, Texas and Mosul, Iraq, you can prove that Muslims are scary and very powerful people who are executing Christians all the time – and so we have a great excuse for kicking the one remaining Muslim family, random people who never hurt anyone, out of town.

.. When a friend of mine heard Eich got fired, she didn’t see anything wrong with it. “I can tolerate anything except intolerance,” she said.

“Intolerance” is starting to look like another one of those words like “white” and “American”.

“I can tolerate anything except the outgroup.” Doesn’t sound quite so noble now, does it?

.. The outgroup of the Red Tribe is occasionally blacks and gays and Muslims, more often the Blue Tribe.

.. The Blue Tribe has performed some kind of very impressive act of alchemy, and transmuted all of its outgroup hatred to the Red Tribe.

.. Even the Nazis, not known for their ethnic tolerance, were able to get all buddy-buddy with the Japanese when they had a common cause.

.. Research suggests Blue Tribe / Red Tribe prejudice to be much stronger than better-known types of prejudice like racism. Once the Blue Tribe was able to enlist the blacks and gays and Muslims in their ranks, they became allies of convenience who deserve to be rehabilitated with mildly condescending paeans to their virtue. “There never was a coward where the shamrock grows.”

.. Spending your entire life insulting the other tribe and talking about how terrible they are makes you look, well, tribalistic. It is definitely not high class. So when members of the Blue Tribe decide to dedicate their entire life to yelling about how terrible the Red Tribe is, they make sure that instead of saying “the Red Tribe”, they say “America”, or “white people”, or “straight white men”. That way it’s humble self-criticism. They are so interested in justice that they are willing to critique their own beloved side, much as it pains them to do so.

.. every Blue Tribe institution is permanently licensed to take whatever emergency measures are necessary against the Red Tribe, however disturbing they might otherwise seem.

.. I had fun writing this article. People do not have fun writing articles savagely criticizing their in-group. People can criticize their in-group, it’s not humanly impossible, but it takes nerves of steel, it makes your blood boil, you should sweat blood. It shouldn’t be fun.

.. I imagine might I feel like some liberal US Muslim leader, when he goes on the O’Reilly Show, and O’Reilly ambushes him and demands to know why he and other American Muslims haven’t condemned beheadings by ISIS more, demands that he criticize them right there on live TV. And you can see the wheels in the Muslim leader’s head turning, thinking something like “Okay, obviously beheadings are terrible and I hate them as much as anyone. But you don’t care even the slightest bit about the victims of beheadings. You’re just looking for a way to score points against me so you can embarass all Muslims. And I would rather personally behead every single person in the world than give a smug bigot like you a single microgram more stupid self-satisfaction than you’ve already got.”

.. But if I want Self-Criticism Virtue Points, criticizing the Grey Tribe is the only honest way to get them. And if I want Tolerance Points, my own personal cross to bear right now is tolerating the Blue Tribe.

..  And when they are good people, they are powerful and necessary crusaders against the evils of the world.