What The Hell America!

Programming note: Today on WTF 2.0 I’m going to be joined by

’s Ed Condon to talk about Catholic Church inside baseball: What’s happening with Catholic Charities and USAID and the Trump administration and JD Vance? I’ll go live on Substack and the site around 1:00 p.m. We’ll send out an alert when we get started and post the replay on the site too.

Over the weekend the director of the president’s National Economic Council went on TV to share his thoughts about chickens and avian flu. It was . . . something.

That man is Kevin Hassett. I want to tell you two stories about Hassett, one tiny and one large, to illustrate what a silly man he is.

The point isn’t to clown on Hassett—the world is full of silly people—but rather to demonstrate how bankrupt the conservative intellectual world has become. Because no system based on any kind of merit would elevate a man like Hassett to the the heights he has reached.

I took Kevin Hassett to lunch once. It was 2007 and I was a thirtysomething writer at The Weekly Standard while Hassett was a fortysomething scholar at the American Enterprise Institute.

Hassett had published a piece about comic books in AEI’s in-house magazine, the American. He argued that comic books were an amazing investment that should be part of everyone’s portfolio.

This was a subject about which I happened to know a truly embarrassing amount. Enough to know that Hassett’s argument was ridiculous:

A savvy collector who purchased a first edition of a Fantastic Four comic book for 10 cents and kept it in pristine condition over the past 45 years could sell it today for $36,000. That comes to a compounded average annual return of 32 percent.

The Fantastic Four are not unique. Consider Justice League of America and The Avengers, two flagship superhero-group comics published, respectively, by DC Comics and Marvel Comics. According to data I gathered from The Overstreet Comic Book Price Guide, these comics—kept in mint condition—produced annual returns of 21 percent since their inception. Issues of The Amazing Spider-Man comics generated an average rate of return of 26 percent a year. An original 1939 edition of Superman #1 is currently valued at $335,000. In all, a random sample of comic books I constructed for this article returned a whopping 23 percent.

These data raise an important question: Why don’t sophisticated money managers and operating companies invest in comic books?

First, this question is not important. Second, Hassett’s premise was flawed: Certain key issues of comic books would have served as excellent investments if you had bought them for cover price and then preserved them for 50 years. But the fundamental problem with investing is that there’s no way to know what issues will turn out to be keys.

In order to get the big returns you’d need to have bought an entire index fund of comics—you’d have to buy every comic book. Because that would have been the only way to be sure you bought the issues that eventually saw big appreciation. Then you’d have to preserve many thousands of comics and store them (which costs money at scale). And because the capital outlays for this project would be significant, you’d have to figure out the opportunity cost. Would the resources spent buying and storing every comic book published for half a century have outperformed investing the same dollars in the S&P, or real estate, or whatever?

I could not believe that an economist could miss something so fundamental; the only explanation I could come up with was that Hassett didn’t know anything about comic books. I sent him a friendly email trying to explain his misapprehension and found him unmovable. He was convinced that he was right and that comic books were a great investment.

Thinking that something wasn’t translating over email, I invited him to lunch.

I forget where we met; some place not more than a couple blocks from 17th and M in Washington, where both the Standard and AEI were located at the time. When we sat down Hassett began talking, and kept talking, with little interruption. He talked primarily about how gifted his young son was at baseball.

Eventually I brought up comic books and tried to explain to Hassett the flaw in his analysis: Sure, if you’d bought Amazing Fantasy #15 (the first appearance of Spider-Man) in August of 1962 and preserved it, then in 2007 it would have been worth hundreds of thousands of dollars. But you would have had to have known that Amazing Fantasy #15 would be the issue to get. And if you had bought all of the comics published in August 1962, then your returns would have been significantly smaller because most of those comics didn’t appreciate at anything close to the rate of AF #15.

Your argument, I said to Hassett, amounted to: If you only pick stocks that go up, then stocks are a great investment.

Hassett was unmoved. Utterly and completely. It wasn’t that he didn’t understand me; it was that he didn’t want to understand. Invincible ignorance.

Walking back to the office I was amused that someone so daft could have ascended to such an august post at a prestigious think tank.

The amusement did not last.

I started doing some digging on Hassett after lunch and discovered that he had coauthored a book called Dow 36,000.

Written in 1999, Dow 36,000 argued that for structural reasons, the stock market was wildly undervalued and was poised to take off like a rocket. Hassett and his coauthor, James K. Glassman, said that 1999 represented a unique moment during which stocks were, as an asset class, undervalued by something like 350 percent:

[The s]ingle most important fact about stocks at the dawn of the twenty-first century: They are cheap. . . . If you are worried about missing the market’s big move upward, you will discover that it is not too late. Stocks are now in the midst of a one-time-only rise to much higher ground—to the neighborhood of 36,000 on the Dow Jones industrial average.

You may remember 1999 as the eve of the dotcom bust. Rather than being poised to make a big move upward, the stock market was at the top of an irrationally exuberant bubble.

When Dow 36,000 was published, the Dow Industrial Average was 10,273. That was October. Three months later the bubble popped. By October 2002 the Dow was 7,286.

At the risk of belaboring the obvious: 7,286 < 36,000.

Share

Everyone in journalism gets things wrong from time to time. Lord knows I’ve been wrong about plenty of things. But to be wrong not in an article, but at book length?

And not merely wrong, but precisely, actively, the wrongest you can possibly be? To have the entire motivating idea of your book destroyed within 12 weeks of publication?

This is the kind of error from which a career is not supposed to recover. By the time I had lunch with Hassett in 2007, he should have been a laughingstock. A cautionary tale.

Instead, the conservative world had created a sinecure for him and helped bury Dow 36,000 to such a degree that it was considered gauche to mention in polite company. AEI had even gone to the trouble of standing up an in-house magazine as a perch from which Hassett and his coauthor (who was made the magazine’s editor) could publish economic illiteracies.

Leave a comment

My lunch with Kevin Hassett was the moment in which I stopped believing in meritocracy.

People succeed in life for lots of reasons. Intelligence, nepotism, charm, luck. So far as I could tell, Hassett had none of those. He was dim, ordinary, tiresome, and not particularly lucky, either.

He was merely the product of a system that needed people like Kevin Hassett to exist. And this system was designed to protect and promote the Kevin Hassetts of the world, irrespective of how silly they were.

Coda: The Dow Jones Industrial Average finally hit 36,000 in November 2023. Under President Joe Biden. Whose economy was the envy of the world.

You may be unsurprised to learn that Hassett criticized Biden relentlessly.

From Mike Drucker:

From the way folks have been talking, you’d think everyone falls into two buckets: those who voted against the mayor who promised to blow up the city and those who voted for the mayor who promised to blow up the city. And now that the mayor, whom I voted for, is blowing up the city, as he promised, I’m one of many people who are being unfairly blamed for something I didn’t want. Okay? I didn’t want the mayor to blow up the city like he mentioned many times; I just wanted him to fix the old bowling alley like he promised in passing once. Anyone saying I’m partially responsible for the explosions is just a sign that they have no argument.

Before you rush to cancel me, try to remember the mayor made lots of promises, and I didn’t expect him to keep them all. Yes, he promised to turn our playgrounds to glass and take a blowtorch to the schools; yes, he said that he was going to use napalm on every grocery store, but, as I said, he also promised he was going to fix the old bowling alley.

Oh, how I loved that bowling alley as a kid. It’s been closed for twenty years, so when the mayor mentioned he’d fix it if we elected him, I had to give it a chance. To be fair, he was also the mayor a few years ago, made the same promise, and failed to fix the bowling alley then. But he did live up to his promise to reintroduce smallpox into local daycares, so at least you know he can get things done, unlike the other guy who did neither of those.

I’ve seen all the attacks online. You use the mayor’s own clear statements of purpose against me just because I consciously chose this. “The mayor said he was going to blow up the city.” Yeah, metaphorically. “The mayor brought up his desire to see the residents of the city cleansed by flame in every speech.” Sure, if you take it out of context, maybe. “The mayor’s election slogan was, ‘Blow It All Up and Watch Them Suffer,’” which is scary only for people stupid enough to take him seriously. The fact that he had to go so far as to pour gasoline all over the Burger King before throwing a Molotov cocktail through the window shows what his opponents have pushed him to do. It’s really his critics that have kept him from fixing the bowling alley.

Read the whole thing.