As a German citizen who has watched in horror (but not complete surprise) as Elon Musk and J.D. Vance recently threw their support behind the far-right, extremist Alternative for Germany (AfD), let me just say: Wow. Simply, wow. You’d think by now that the billionaires and political hopefuls of the world would at least do a little research before cheerleading a group. But no—here we are.

Let’s start with the basics. The AfD is not some misunderstood political movement seeking "freedom of speech" or "national pride." No, the AfD is an extremist, xenophobic party officially classified by Germany’s Bundesamt für Verfassungsschutz (the Federal Office for the Protection of the Constitution) as a right-wing extremist organization. Yes, I’m aware that’s a mouthful, but the key takeaway here is: this is officially an extremist group. This isn’t a ‘disagreement over policy.’ This is an organization whose views are so far beyond the mainstream that they are under surveillance by the German government. That’s what happens when a party is labeled anti-constitutional, not compatible with the Basic Law, and deemed a threat to democracy itself.

But it seems Musk and Vance don’t have the slightest clue about any of this. After all, why bother reading German court rulings or understanding why an entire nation has held massive protests against the AfD’s neo-Nazi and anti-Semitic ideologies when you can just bask in the glory of being “controversial” on Twitter, right?

To help out these two world-famous public figures who have, it seems, never ventured beyond the surface of their own echo chambers, here’s a quick primer on why the AfD is not just "a little right-wing" or "alternative"—it’s an extremist nightmare. The AfD’s far-right faction, known as Der Flügel (The Wing), was so radical that it caused the resignation of the party’s founders. The German courts have repeatedly ruled that this faction is anti-constitutional, and it is considered "not compatible with the Basic Law"—you know, the very foundation of Germany’s democracy. And yet, somehow, Elon Musk and J.D. Vance feel comfortable cosigning this extremist ideology.

Let’s go deeper, shall we? In case the esteemed Vice-President elect and Co-President elect missed it, Germany has a commitment—a national pact, if you will—to never again let Nazi ideologies take root. It’s why the AfD’s youth wing is officially classified as an extremist organization, enabling the German government to track their every move through wiretaps, undercover agents, and even surveillance of their online activity. It’s not overreach, it’s basic, fundamental security—because if there's one thing we learned from history, it’s that letting neo-Nazi groups fester is the last thing Germany (or the world) can afford. And the AfD, like the Nazis, have anti-semitism as a foundation of their beliefs.

But hey, let’s not take the word of a bunch of bureaucrats and government agencies. Let’s hear from some experts, right? Jewish organizations across Germany and beyond have long warned about the AfD’s rampant anti-Semitism, including Holocaust denial. A report by the American Jewish Committee found that anti-semitism is central to AfD philosophy. That’s not "fake news"—that’s coming directly from the people whose families lived through the atrocities of the Nazi era. But J.D. Vance, apparently, knows better. His recent dismissal of these concerns as "fake news" is a masterclass in intellectual laziness—or, dare I say, willful ignorance.

And while Vance dismisses reports from the German government and leading Jewish organizations, let's take a moment to point out his fantastically misguided assertion that AfD supporters come from areas in Germany that were historically most opposed to the Nazi Party. Oh, J.D. Vance, what a charmingly naïve take. You see, Vance may not be aware that in 1990, Germany reunified, and East Germany, long subjected to Soviet-backed pro-Nazi propaganda, suddenly had access to these so-called "anti-Nazi" regions. So when he points to the areas that opposed Nazi ideology, he conveniently ignores the fact that those areas were reshaped—demographically, politically, and ideologically—after the fall of the Berlin Wall. But why bother with history when a good soundbite will do?

It’s almost comical how out of touch both Vance and Musk are with the broader geopolitical realities and history of Europe. It's as though they've picked the worst possible hill to die on. And let's be honest: there’s something deeply troubling about two high-profile figures publicly backing a party that is not only extremist but is officially under surveillance for posing a threat to democracy, all while gleefully dismissing the warnings of countless experts.

The bottom line is this: the AfD is a dangerous, anti-Semitic, extremist group. Period. Full stop. Musk and Vance’s glowing endorsements of the party are either due to a complete lack of understanding or, more likely, a deeper, more troubling alignment with extremist ideologies. They’ve both played fast and loose with history, politics, and facts—and unfortunately, the consequences of their words will be felt far beyond Twitter and Ohio.

So, here's to hoping that next time these "visionary" men are thinking of endorsing dangerous, hate-filled groups, they at least take five minutes to Google it first. Or better yet, maybe they could ask a German. We seem to know a thing or two about this stuff.

Here’s a virtual toast to your flourishing in 2025. But more so than any other year, our wishes should not just be from person to person, but rather wishes for societies – and the society of societies, global humanity. I haven’t felt so gloomy about politics, broadly defined, in a very long time. A genocide is happening while all of us can see it, and mainstream politics and society tries every trick possible to rationalize and justify what is happening. Our politicians are failing to get us off the path to the deadly collapse of Earth’s ecosystems. The rise of autocracy and fascist policies has now reached such levels that we may start to wonder why so many in the generations of our parents and grandparents risked, and often sacrificed, their lives to free us from fascism – only to give us the freedom to vote the authoritarians and the fascists back into power.

(I deleted all the swear words I included when I wrote the first draft of this post. But I confess, these days I swear a lot when I think and write about politics).

So what to do? There are at least three options: Fight, flee, or freeze. The last one would amount to just let it happen, and hope for the best – that technologies will save us, that democracies are resilient, that we are exaggerating the dangers. Well, I am not sure… is this position supported by the facts? I doubt it, and the risks of being too optimistic or naïve are too large, in my view.

The second, flee, would be to acknowledge the dangers but stop being politically engaged, or not take up the opportunity to become politically engaged, because one doesn’t want to be involved – too risky, too burdensome, too much of a hassle. One can flee into the the world of shopping-malls and consumerism, or the world of yoga and meditation retreats, or just go off-grid and live a simple life in Walden. Or become obsessed with money and one’s own social status. Fleeing certainly has its attractive features – to avoid having to be stressed and risk activists’ exhaustion, and just simply to have an easier life. But except if one does not care that something similar to Apartheid or genocides could reoccur, or that Russian-type “democracy” might spread over the world, it is a position whereby one freerides on the efforts of others to engage in the resistance to evil.

The conclusion must therefore be that we should collectively redouble our efforts in fighting and resisting evil, but in a way that we also take proper care of ourselves. Hence, we must make our resistance more effective, so that it does not deplete our energies before we’ve reached our goals: strengthen democracies, avoid collapse of key planetary ecosystems, stop genocides and wars, and assure at least some minimal levels of social justice. It also certainly implies that as many people as possible should join the resistance, since this is not work that can be done by small numbers. I do not know of magical tricks on how to get us this kind of effective resistance, but perhaps these things help: talking about our resistance-activities with others, and inviting them to join; spreading lots of love and laughter among our comrades in the resistance; acknowledging and thanking those who are leading and contributing to the resistance; being aware that the strength of our strategies in resistance is key and hence that we need to learn about strategic resistance and upgrading our strategic skills (rather than just assuming that good intentions are enough); and engaging in proper self-care – doing exercise, going outdoors (nature!), meeting people just for fun, sharing meals, and doing whatever we need to nurture ourselves and others – whether that is going to a weekly yoga or salsa class, or to a house of prayer. What else to add?

A.A. Milne is best-known today as the author of the Winnie-the-Pooh books, but he also had his moments are a serious essayist. In a 1940 essay, he offered this comment on the first-rate, second-rate, and third-rate mind. It seemed useful to me to pass along during the present climate of intense partisanship, where comments are often judged by what side you seem to be on, rather than on what you have actually said. Milne wrote:

I wrote somewhere once that the third-rate mind was only happy when it was thinking with the majority, the second-rate mind was only happy when it was thinking with the minority, and the first-rate mind was only happy when it was thinking. With equal truth it may be said that a first-rate mind is not one which does not remember the past, nor is it one which cannot forget the past; it is a mind which will use the past but not be ordered by it. It is a mind independent of everybody and everything but the facts in front of it. It is as little perturbed to find itself sharing a thought with the simple as it is elated to find itself sharing a thought with the subtle. It will fight for what it has discovered to be right …

(In the comforting shadow of these parentheses, I will say that I aspire to be a first-rate mind in Milne’s sense, but with only partial success. As a friend of mine used to say, whenever you pick a side on a given issue, it’s disturbing to notice that some of your co-believers are on your side for very different and sometimes disturbing reasons.)

The broader context for Milne’s comment may be of interest. It appears in a short essay called “War with Honour,” from the McMillan War Pamphlets in 1940. Milne referred to himself as a “practical Pacifist.” He wrote: “I am still a Pacifist, but I hope a practical Pacifist. I still want to abolish war.” But in 1940, he argued that, paradoxically, improving the practical chances for the abolition of war required fighting against Nazi Germany. Here’s an unindented slice from Milne’s essay about “Crying ‘Wolf'”:

____

The fable of the boy who amused himself by crying “Wolf!” so often that the villagers no longer believed him when the wolf came is used, like all fables, to point a moral. The moral is directed against the boy. “Silly boy! See what happened to him!” But the moral might equally be directed against the villagers. Silly villagers! See what happened to them! For, though the boy may have been no great loss, they also lost their flocks. Did they deserve to lose them? Let us consider the reasoning which went on in a villager’s mind.

1. This boy said “Wolf!” three times when there was no wolf.

2. It is therefore certain that there is no wolf this time.

Could any reasoning be sillier? What he should have thought was:

1. The boy is only there because it is extremely likely that a wolf will come one day.

2. It is certain that, when the wolf does come, the boy will call out.

3. It is not certain, after the thrashing I gave him yesterday, that he will call out again if the wolf doesn’t come.

4. Therefore the chances are that the wolf is here.

And even if it turned out to be another false alarm, the reasoning would be just as true at the next alarm. Stupid, stupid villagers!

To many Pacifists (indeed, to all who write to me) the great stumbling-block in the way is the fact that “Wolf!” has been cried before.

“A war to end war?” they say derisively. “You said that of the last war!”

“Hitler is the devil?” they jeer. “You said that of the Kaiser!”

“This war is different from any other war? Why, you yourself pointed out that militarists said that of every war!”

“We are fighting for Freedom? How you derided these fights for Freedom!”

“We are fighting for God? How fiercely you attacked the Churches for identifying God with their country!”

It is a very good retort; it would carry the house in any school debating society; but it doesn’t prove that there is no wolf.

I wrote somewhere once that the third-rate mind was only happy when it was thinking with the majority, the second-rate mind was only happy when it was thinking with the minority, and the first-rate mind was only happy when it was thinking. With equal truth it may be said that a first-rate mind is not one which does not remember the past, nor is it one which cannot forget the past; it is a mind which will use the past but not be ordered by it. It is a mind independent of everybody and everything but the facts in front of it. It is as little perturbed to find itself sharing a thought with the simple as it is elated to find itself sharing a thought with the subtle. It will fight for what it has discovered to be right, as happily in the serried ranks of the Blimps as in the lonely company of the Shaws.

Even though all the stupid militarists cried “Wolf!” when there was no wolf, yet the wolf is at our door now. Even though all the clever Pacifists said that there was no wolf, when there was no wolf, yet the wolf is at our door now. If we cling to the theory that wolves are delightful creatures when treated kindly as cubs, then perhaps this one wasn’t treated kindly as a cub. If we proved conclusively six years ago that wolves never came as far west as England, then perhaps this one has escaped from a zoo, or is some foul hybrid unknown to zoology. What does it matter how right or wrong we were in the past? There is death, and worse than death, waiting for ourselves and our children. What do we do?

The post A.A. Milne on First-Rate, Second-Rate, and Third-Rate Minds first appeared on Conversable Economist.

When you listen to economists who have worked in or near government about their role in the mechanisms of policy-making, they are appropriately humble. They harbor few illusions that a quick lecture about, say, the dynamics of supply and demand or the advantages of rule-based monetary policy will convert politicians to their point of view. They are aware that political figures will grab an economic argument if it tends to support their pre-existing views, and ignore the argument otherwise. That said, economics does play a role in real-world economic policy–but how?

Milton Friedman offered one answer to this question in the “Preface” to the 1982 issue of Capitalism and Freedom. He wrote:

What then is the role of books such as this? Twofold, in my opinion. First, to provide subject matter for bull sessions. As we wrote in the Preface to Free to Choose: “The only person who can truly persuade you is yourself. You must turn the issues over in your mind at leisure, consider the many arguments, let them simmer, and after a long time turn your preferences into convictions.”

Second, and more basic, to keep options open until circumstances make change necessary. There is enormous inertia–a tyranny of the status quo–in private and especially governmental arrangements. Only a crisis-actual or perceived-produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes politically inevitable.

I noted last spring an essay by Alan Blinder, who wrote in a similar spirit about the gap between economics and politics. Blinder wrote: “Almost a half century ago, George Stigler (1976, p. 351), later a Nobel prize winner, wrote that `economists exert a minor and scarcely detectable influence on the societies in which they live.’ Stigler was no doubt exaggerating to make his point. But he had a point. And things have not changed much since.”

However, Blinder also emphasizes the role that economists can play in designing legislation to improve the ratio of benefits to costs.

So here’s my advice to economists interested in actual–as opposed to theoretical–policymaking. Don’t forget about efficiency. It matters. We are right about that. But we may have to content ourselves with nibbling around the edges, below the political headline level, to make the details of a complex policy package less inefficient. Call it the theory of the third or fourth best.

Back in 1996, on the 50th anniversary of the legislation that created the Council of Economic Advisers, the Journal of Economic Perspectives had a short symposium on the subject of the CEA and policy advice. Charles L. Schultze, who headed the CEA under President Carter, wrote ” The CEA: An Inside Voice for Mainstream Economics:”

Forty years of observing policy debates, including 15 years of participating in them, have not dulled my amazement at how few participants have a grasp of fundamental economic principles and how differently from economists they analyze issues. Several reasons stand out for the wide divergence between the views of economists and others. First, to politicians the world is full of corner solutions; the idea of continuous cost and demand curves with nonzero elasticities is foreign to their way of thinking. Second, some important principles in macroeconomics and international trade are counterintuitive; for example, the essential reason for a country to export is to import, not to increase total employment. In periods of full employment, additional spending on “good things” like exports or investment can harm the economy. The balance between a country’s saving and domestic investment is by far the most important determinant of the trade deficit, not “unfair” trading practices by foreign competitors. Depending on costs, there is almost always an optimal amount of “bads” that society shouldn’t try to eliminate. Precious few policymakers grasp the principle of comparative advantage.

Third, noneconomists have an almost universal desire to deal with market failures through carefully specified regulation rather than a change in incentive structures. Such specification is the natural function of lawyers, and the legal profession continues to dominate Congress. When government intervenes in the marketplace, our political leaders typically rule out the manipulation of economic incentives to deter undesirable actions because reliance on market responses injects an uncertain, partially random, and therefore “unfair” set of forces into the picture. Yet in the American political context, any use of market forces and incentives for policy purposes would be modest compared to the enormous power that our society readily cedes to the market over a huge slice of our national life.

In the same symposium, Herbert Stein, who chaired the CEA during part of President Nixon’s term of office, wrote “A Successful Accident: Recollections and Speculations about the CEA.” He described the qualifications for an economic adviser in this way:

The qualifications for an adviser differ from those for an innovative scientist or theorist. People who invent new ideas almost invariably have a devotion to them, but an adviser should not be so devoted to some new idea that he is unable to give the president a picture of the options that economics supports. As Frank Knight (1933, p. xx) said, “Anything very original in economics would be wrong anyway.” A few years ago, I wrote of the characteristics necessary in a good economic adviser (Stein, 1991, p. 9). In addition to a stock of economic knowledge, which is “slowly replenished and refreshed with a flow of ideas from the journal mill,” a successful adviser needs “knowledge of the institutions in the field of his concern; a body of relevant statistical information; a set of ideas about how the government works; a political calculus of several kinds; judgment; and communication skills.” These qualities have been sought by the people selecting members of the CEA and generally found in those who have accepted the position.

Oddly enough, we just had a presidential election in which both Trump and Harris were undergraduate economics majors. This fact does not necessarily raise one’s hopes about how economics can contribute to public debate and policy-making. Economists are rarely going to set the policy agenda. But in a political setting, perhaps especially when it can become imperative to “do something,” serious economists do have access to pile of ideas laying around. Some of the ideas in that pile are concrete and spelled out policies. But many of the ideas are instead about the range of ways in which to structure a policy: that is, how to structure taxes, subsidies, payments, regulations, and even institutions in the most useful ways. Pragmatic economists involved in the design of public policy often just want to shape the agenda-of-the-day in a way that promises to improve the ratio of benefits to costs.

The post Economists, Public Policy, and the Ideas that are Lying Around first appeared on Conversable Economist.

It is the end of the year and many organizations, from mainline journalistic to individual folks just running a blog, are asking for money.

I am not. This is not because I am in any way superior to the folks who are asking for money. I am a fan of money, and through a series of circumstances that don't reflect any particular cleverness on my part, my family and I are well cared for. So I am not.

I am well aware of the problem outlined in the 2020 Current Affairs essay by Nathan Robinson, The Truth Is Paywalled But The Lies Are Free. The lies are not so much free as they are paid for by other folks with an agenda. One of the great dodges of the policy world is the Think Tank, a bunch of folks paid to advocate and argue for a particular agenda. And because they are paid by the Thinky Tank backers, they can offer all manner of op-ed and policy paper and "report" for "free." This same principle applies to propaganda shops set up to mimic legitimate journalism. These tricks are available to the whole political spectrum, but some parts of the spectrum are far more well-funded than others. The Curmudgucation Institute is not very well funded and has a minimal staff, and that's just fine.

Fact remains that people who collect and research and write and publish ideas and arguments need food, clothing and shelter like anyone else. 

Some outlets do pay me for my work, and I accept that deal because A) they ought to and B) I'm not going to "compete" with other writers by working for $0.00. Substack lets people pledge to pay to subscribe, and it is not-inconsiderable ego boost for me to see those pledges. But I got into this because I wanted to share certain ideas and argue for things I care about and get the word out to as many people as I could in as many ways as I could. Also, when I work for pay, I feel an obligation to maintain a certain level of professionalism and grown-up work. But at the mother ship, the roots from which the rest of my work grew, I started out just wanting to vent, and I am happy to maintain that freedom.

The freedom, for instance, to meander and digress.

Let me get to the "but." 

I am committed to running this space for free, but I am able to do that because I benefit from certain privileges which others do not enjoy. For some folks, this is an important, even a main, source of income and support. And many of these folks are just so excellent and important as writers and analysts and observers (and many of them are not so comfortable passing the hat).

So my ask this New Year is this-- if you have ever had an urge to send money my way, I ask that you transfer that urge to someone whose work you appreciate and who has, however shyly or boldly, held their hat out. Plunk down some bucks for the work that you value and that you want to see staying in the world.

We make the world a better place by holding up and supporting the people who are doing the work that we value. Share the lift and the light. And have a happy New Year! 

The Institute main office. (Not shown: Victrola and tuba)