Monday assorted links
2. Just say no to the monopsony model.
3. Your dose of John Cochrane.
4. More on the recent climate change estimate. It seems the paper should not have been published?
What the recent dust-up means for AI regulation
From my new Free Press column, I see these as the most important facts:
Congress has not passed explicit regulation of AI foundation models, and an executive order from President Trump limited regulation at the state level. But do not think that laissez-faire reigns. In addition to existing (largely pre-AI) laws, which lay out general principles of liability, and laws from a few states, the United States is engaged in a kind of “off the books” soft regulation.
The major AI companies keep the national security establishment apprised of the progress they are making, as has been the case with Anthropic. There is a general sense within the AI industry that if the national security authorities saw anything in the new products that was very concerning or that might undermine the national interest, they would inform the president and Congress. That would likely lead to more formal and more restrictive kinds of regulation, so the major AI companies want to show relatively safe demos and products. An informal back and forth enforces implied safety standards, without the involvement of formal legislation.
That may sound like an unusual way to do regulation, but to date the system has worked relatively well. For one thing, I believe our national security establishment has a better and more sophisticated understanding of the issues than does Congress. Congress right now simply isn’t up to the job, as indeed the institution has been failing more generally. Most representatives seem to know little about the core issues behind AI regulation.
As it stands, AI progress has been allowed to proceed, and the United States has stayed ahead of China, without major catastrophes. The burden on the companies has been manageable, and the system, at least until last week, was flexible.
Another advantage of this system is that both Congress and the administrative state can be very slow to act. The AI landscape can change in just weeks, yet our federal government is used to taking years to issue laws and directives. Had we passed AI legislation in, say, 2024, today it would be badly out of date, no matter what your point of view on what such regulation should accomplish. For instance, in 2024 few outsiders were much concerned with the properties of, or risks from, autonomous AI “agents.” Today that is the number-one topic of concern.
Though it is not driven by legislation, the status quo AI regulatory system is not anti-democratic, as it operates well within the rules passed by Congress and the administrative state. It is more correct to say the current AI guardrails rely on the threat of regulation, rather than regulation itself, with the national security state as the watchdog. The system sticks to a kind of creative ambiguity. The national security state offers no official imprimatur for the new advances, but they proceed nonetheless. Nevertheless, the various components of the national security state reserve the right to object in the future.
It is also correct, however, to believe that such a system cannot last forever. At some point creative ambiguity collapses. Someone or some institution demands a more formal answer as to what is allowed or what is not allowed. At that point a more directly legalistic system of adjudication enters the picture, and Congress likely starts paying more attention.
With the recent dispute between Hegseth and Anthropic, we have taken a step away from the previous regulatory mode of quiet cooperation. Instead, the relationship between the military and the AI companies has become a matter of public concern. Now everyone has an opinion on Hegseth, Anthropic, and OpenAI, and social media is full of debate.
No matter “whose side you take,” it would have been better to have resolved all this behind closed doors.
Brazil is underrated
Numerous nations in the Middle East are being pulled into the current conflict and have received missile attacks from Iran. I believe the proper Bayesian update is that Brazil is underrated.
The country has plenty of water, and lots of capacity to grow its own food. It is an agricultural powerhouse. It is developing more and more fossil fuels. No neighbor or near neighbor dares threaten it. You cannot imagine conquering it, because even the government of Brazil has not conquered its own country.
It is big enough that even the United States can push it around to only a limited degree.
Crime rates are high, but on the up side that gives the place a certain resiliency. People are used to bad events, and society is structured accordingly. You cannot write of “Brazil falling into dystopia” without generating a laugh.
If immigration bothers you (not my view), Brazil and Brazilian culture is not going to be swamped by people coming from somewhere else. For better or worse.
Brazil has “stayed Brazil” through both democracy and autocracy.
Worth a ponder. Here is an FT piece on “Brazil’s Dubai.”
One view of Iranian strategy
Some observations and comments on Trump and Israel’s war on Iran:
1. Tehran is not looking for a ceasefire and has rejected outreach from Trump. The reason is that they believe they committed a mistake by agreeing to the ceasefire in June – it only enabled the US and Israel to restock and remobilize to launch war again. If they agree to a ceasefire now, they will only be attacked again in a few months.
2. For a ceasefire to be acceptable, it appears difficult for Tehran to agree to it until the cost to the US has become much higher than it currently is. Otherwise, the US will restart the war at a later point, the calculation reads.
3. Accordingly, Iran has shifted its strategy. It is striking Israel, but very differently from the June war. There is a constant level of attack throughout the day rather than a salvo of 50 missiles at once. Damage will be less, but that isn’t a problem because Tehran has concluded that Israel’s pain tolerance is very high – as long as the US stays in the war. So the focus shifts to the US.
4. From the outset, and perhaps surprisingly, Iran has been targeting US bases in the region, including against friendly states. Tehran calculates that the war can only end durably if the cost for the US rises dramatically, including American casualties. After the assassination of Ayatollah Khamenei, Iran says it has no red lines left and will go all out in seeking the destruction of these bases and high American casualties.
5. Iran understands that many in the American security establishment had been convinced that Iran’s past restraint reflected weakness and an inability or unwillingness to face the US in a direct war. Tehran is now doing everything it can to demonstrate the opposite – despite the massive cost it itself will pay. Ironically, the assassination of Khamenei facilitated this shift.
6. One aspect of this is that Iran has now also struck bases in Cyprus, which have been used for attacks against Iran. Iran is well aware that this is an attack on a EU state. But that seems to be the point. Tehran appears intent on not only expanding the war into Persian Gulf states but also into Europe. Note the attack on the French base in the UAE. For the war to be able to end, Europe too has to pay a cost, the reasoning appears to be.
7. There appears to be only limited concern about the internal situation. The announcement of Khamenei’s death opened a window for people to pour onto the streets and seek to overthrow the regime. Though expressions of joy were widespread, no real mobilization was seen. That window is now closing, as the theocratic system closes ranks and establishes new formal leadership.
Again: The question “How will this end?” should have been asked before this war was triggered. It wasn’t.
That is from Trita Parsi, via B. Note that some people consider Parsi a biased source (not sufficiently anti-Iran?), in any case it is worth pondering how other parties may view the current situation.
Sunday assorted links
2. UAE to cover expenses for affected travelers. And “emergency visas” are issued on the spot.
3. Abbas Amanat, Iran: A Modern History is for me (by far) the best general history of the country. I like the cover too.
4. From two weeks ago: “Perhaps there is a new “Trump doctrine,” namely to focus on going after lead individuals, rather than governments or institutional structures. We already did that in Venezuela, and there is talk of that being the approach in Iran. If so, that is a change in the nature of warfare, and of course others may copy it too, including against us. Is there a chance they have tried already?”
5. “Simple believers” in Ukraine shun the modern world (NYT).
What should I ask Katja Hoyer?
Yes I will be doing a Conversation with her. She is the author of a forthcoming book on Weimar, namely Weimar: Life on the Edge of Catastrophe. Note that much of the book considers the city of Weimar, mostly in Nazi times, and not just the Weimar era. She also has published Beyond the Wall: A History of East Germany, and Blood and Iron: The Rise and Fall of the German Empire 1871-1918. She is active in journalism, podcasting, and is a visiting research fellow at King’s College London. She was born in East Germany and is both British and German.
So what should I ask her?
New results on the economic costs of climate change
I promised you I would be tracking this issue, and so here is a major development. From the QJE by Adrien Bilal and Diego R Känzig::
This paper estimates that the macroeconomic damages from climate change are an order of magnitude larger than previously thought. Exploiting natural global temperature variability, we find that 1○C warming reduces world GDP by over 20% in the long run. Global temperature correlates strongly with extreme climatic events, unlike country-level temperature used in previous work, explaining our larger estimate. We use this evidence to estimate damage functions in a neoclassical growth model. Business-as-usual warming implies a present welfare loss of more than 30%, and a Social Cost of Carbon in excess of $1,200 per ton. These impacts suggest that unilateral decarbonization policy is cost-effective for large countries such as the United States.
Here is an open access version. You may recall that earlier estimates of climate change costs were more like a five to ten percent welfare loss to the world. I do not however find the main results here plausible. The estimation is extremely complicated, and based on the premise that a higher global temperature does more harm to a region than a higher local temperature. And are extreme events a “productivity shock,” or a one-time resource loss that occasions some Solow catch-up? Is the basic modeling consistent with the fact that, while the number of extreme storms may be rising, the number of deaths from those same storms is falling over time? Lives lost are not the same as economic costs, but still the capacity for adjustment seems considerably underrated. What about the effects to date? The authors themselves write: “According to our counterfactual, world GDP per capita would be more than 20% higher today had no warming occurred between 1960 and 2019.” I absolutely do not believe that claim.
In any case, here is your update. To be clear, I do absolutely favor the development of alternative, less polluting energy sources.
Stand with free speech and the Constitution
A landmark law that limits children under the age of 16 to one hour per day on social media apps has been blocked by a US court, in a blow to child safety campaigners seeking to limit exposure to sites such as Instagram and YouTube.
In an opinion released on Friday, a federal judge in Virginia halted the enforcement of a bill passed by the state last year, under which social media companies could be fined $7,500 per violation.
The state “does not have the legal authority to block minors’ access to constitutionally protected speech until their parents give their consent by overriding a government-imposed default limit”, Judge Patricia Tolliver Giles wrote of the measure, implementing a preliminary injunction.
Giles concluded the law was “over-inclusive”. Under it, “a minor would be barred from watching an online church service if it exceeded an hour on YouTube . . . yet, that same minor is allowed to watch provider-selected religious programming exceeding an hour in length on a streaming platform,” she wrote. “This treats functionally equivalent speech differently.”
Here is more from the FT.
Some opinions
On the war, Matt Yglesias has a good take. On AI and the military, Ross Douthat has a good take (NYT). If you wish to sample an “outside the box” opinion, here is Eliezer.
Saturday assorted links
The war
You may comment here if you wish…
Think through the situation one step further
Many of you got upset when I mentioned the possibility that parents use smart phone software to control the social media usage of their kids. There was an outcry about how badly those systems work (is that endogenous?). But that is missing the point.
If you wish to limit social media usage, mandate that the phone companies install such software and make it more effective. Or better yet commission or produce a public sector app to do the same, a “public option” so to speak. Parents can then download such an app on the phone of their children, or purchase the phone with the app, and manipulate it as they see fit.
If you do not think government is capable of doing that, why think they are capable of running an effective ban for users under the age of sixteen? Maybe those apps can be hacked but we all know the “no fifteen year olds” solution can be hacked too, for instance by VPNs or by having older friends set up the account.
My proposal has several big advantages:
1. It keeps social media policy in the hands of the parents and away from the government.
2. It does not run the risk of requiring age verification for all users, thus possibly banishing anonymous writing from the internet.
3. The government does not have to decide what constitutes a “social media site.”
Just have the government commission a software app that can give parents the control they really might want to have. I am not myself convinced by the market failure charges here, but I am very willing to allow a public option to enter the market.
The fact that this option occasions so little interest from the banners I find highly indicative.
AI Won’t Automatically Accelerate Clinical Trials
Although I’m optimistic that AI will design better drug candidates, this alone cannot ensure “therapeutic abundance,” for a few reasons. First, because the history of drug development shows that even when strong preclinical models exist for a condition, like osteoporosis, the high costs needed to move a drug through trials deters investment — especially for chronic diseases requiring large cohorts. And second, because there is a feedback problem between drug development and clinical trials. In order for AI to generate high-quality drug candidates, it must first be trained on rich, human data; especially from early, small-n studies.
…Recruiting 1000 patients across 10 sites takes time; understanding and satisfying unclear regulatory requirements is onerous and often frustrating; and shipping temperature-sensitive vials to research hospitals across multiple states takes both time and money.
…For many diseases, however, the relevant endpoints take a very long time to observe. This is especially true for chronic conditions, which develop and progress over years or decades. The outcomes that matter most — such as disability, organ failure, or death — take a long time to measure in clinical trials. Aging represents the most extreme case. Demonstrating an effect on mortality or durable healthspan would require following large numbers of patients for decades. The resulting trial sizes and durations are enormous, making studies extraordinarily expensive. This scale has been a major deterrent to investment in therapies that target aging directly.
Dan Simmons, RIP
Alas, he has passed away. A great writer, you should start with Hyperion if you have not read it already.