Category: Current Affairs

Amsterdam urban engineering

An average of 18 people a year reportedly drown in the city’s canals: often men, late at night, falling to their deaths while apparently taking a “wild wee”.

Last week, councillors demanded answers to questions on water safety, prompted by the death of Sam van Grondelle, a 29-year-old Amsterdammer who disappeared in October and whose body was discovered three days later in the Veemkade waterway.

As part of a multibillion-euro renovation of the city, the authorities are putting in extra ladders and grab ropes along 200km of crumbling canal wall. However, most of the walls remain high, are poorly lit and are often flanked by an ankle-high “car rail” to stop vehicles rolling in. They form a perfect trip hazard for distracted wanderers.

The authorities are focused on: “…prevention techniques and safety campaigns in the UK and Ireland.”  About ten percent of the drowned men had their flies open.  Here is the full Times of London story.

Non-random splat

It is heresy to say this, but I don’t think many people will be listening to the music of Jelly Roll Morton in the future.  It feels “too archived” and less vital than say Haydn, much less Mozart or Beethoven.

So many people are defending Luka on Twitter, but he doesn’t do much to make his teammates better.  And why didn’t Jalen Brunson stick around on the Mavericks?  “Who wants to play with you?” is an underrated metric for assessing player quality, not to mention hire quality more generally.  Luka is on track to be one of the five (three?) greatest scorers of all time, but not one of the fifteen greatest players.  (Are Kevin Durant and Kobe the other two?  Is Dominique Wilkins another great scorer who also was less of a complete player?)

There are various rumors about Taylor Swift and her beau.  But no one says “If those rumors were true, they would just admit it!  It wouldn’t cost them anything in terms of income or endorsements.”  That indicates there is still a significant shortage of tolerance and equal treatment in American society.

Fabio Caruana as an articulate thinker is very underrated.

In the late 1990s I went to visit the Houthis in Yemen, and I don’t think deterrence is going to work against them.

Have any economists or pundits stepped forward and admitted that they underestimated Milei?

My current reason for not buying the Apple Vision Pro is that I am afraid I won’t know how to turn it on and get it working.

Quite possibly Senegal is not a democracy any more.

The Chess Olympiad already (de facto) allows performance enhancers, though not computers.

Steakhouses are now underrated, most of all if you don’t order steak.

There is a (suddenly well-known) person on social media who so embodies modes of argumentation I find objectionable that at first I thought his was a parody account.

Vaccine Induced Social Amnesia

Source: Clinique CME

NYT: In 2022, there were 941 reported cases of measles in the World Health Organization’s European region. Over just the first 10 months of last year, according to an alarming bulletin the W.H.O. issued in mid-December, there were more than 30,000.

This is the kind of spike — a 3,000 percent increase — that looks implausible in headlines….But as the year drew to a close, the European measles outbreak kept growing. Through December, case numbers in the region eventually reached over 42,000, and although the largest outbreaks were in countries most Americans regard as pretty remote (Kazakhstan, Kyrgyzstan and Russia), there is also a vicious surge in Britain, which may look plausibly to us as the canary in a coal mine. There, in just one of England’s nine regions, the West Midlands, 260 cases have been confirmed and dozens more suspected, in a country which, as a whole, recorded just two cases as recently as 2021.

As David Wallace-Wells explains, vaccination rates are still 90%+ and down only slightly but measles is so infectious that even amid an otherwise well-vaccinated population, it can sometimes find pockets of low vaccination populations and spread like wildfire.

Measles is an especially nasty infection because it can induce “immunological amnesia, thereby making individuals more susceptible to pathogens that they previously were able to resist.

Ironically, just as measles can induce immunological amnesia, vaccines can induce social amnesia about the severity of diseases, thereby making society more susceptible to pathogens that they previously were able to resist.

Why it is difficult for Milei to rein in inflation

Like the heat in the austral summer, inflation in Argentina is high and showing no sign of meaningful relief anytime soon. It rose from a monthly 13% in November to 25% in December and, according to the latest central bank survey, may come in at around 20% in both January and February…

Argentina’s central bank in December lowered real interest rates to deeply negative territory, hoping to reduce the issuance of pesos to pay for those interests—a move that pushes consumers to spend or dollarize their savings, adding to inflation and to the exchange rate premium. In addition, the early lifting of price controls, including administered prices such as health insurance or gas, frontloaded the relative price correction at the expense of inflation.

All this, combined with the lack of a price reference—the central bank is still working on its monetary program—may have led to a so-called “repricing overshooting.”

And:

Moreover, if inflation persists, the December devaluation may soon look insufficient, feeding expectations of a new realignment that, in turn, would give inflation inertia a new push—ultimately leading to a stop-and-go exchange rate pattern that sacrifices the only remaining nominal anchor of the economy.

Add to that that a large portion of the fiscal plan has just been withdrawn from the Omnibus Bill currently under heated debate in Congress, and we are left with only one bullet to bring monthly inflation back to single digits in the near term: a severe—and politically fraught—economic recession.

That is all by Eduardo Levy Yeyati, there is much more and the piece is useful throughout.

In Praise of Non-conformity

In this age, the mere example of nonconformity, the mere refusal to bend the knee to custom, is itself a service. Precisely because the tyranny of opinion is such as to make eccentricity a reproach, it is desirable, in order to break through that tyranny, that people should be eccentric. Eccentricity has always abounded when and where strength of character has abounded; and the amount of eccentricity in a society has generally been proportional to the amount of genius, mental vigour, and moral courage which it contained. That so few now dare to be eccentric, marks the chief danger of the time.

John Stuart Mill

I saw this quote on Facebook and thought immediately of my friend Bryan Caplan. Bryan’s book of essays, You Will Not Stampede Me: Essays on Non-Conformism is an excellent guide not simply to Bryan’s non-conformism but also on how to be a successful non-conformist in a conformist world.

Did the Trump tariffs help the heartland?

No, but they did get him some votes there:

We study the economic and political consequences of the 2018-2019 trade war between the United States, China and other US trade partners at the detailed geographic level, exploiting measures of local exposure to US import tariffs, foreign retaliatory tariffs, and US compensation programs. The trade-war has not to date provided economic help to the US heartland: import tariffs on foreign goods neither raised nor lowered US employment in newly-protected sectors; retaliatory tariffs had clear negative employment impacts, primarily in agriculture; and these harms were only partly mitigated by compensatory US agricultural subsidies. Consistent with expressive views of politics, the tariff war appears nevertheless to have been a political success for the governing Republican party. Residents of regions more exposed to import tariffs became less likely to identify as Democrats, more likely to vote to reelect Donald Trump in 2020, and more likely to elect Republicans to Congress. Foreign retaliatory tariffs only modestly weakened that support.

That is from a new NBER working paper by David Autor, Anne Beck, David Dorn, and Gordon H. Hanson.

Milei update, a further report will be pending

Central African Republic estimate of the day

Published in the journal Conflict and Health last April, the report suggests that the world’s deadliest humanitarian crisis in 2022 was not in Afghanistan, Ukraine, or other places featured regularly in the news — but in CAR.

The Central African Republic has neither reliable birth and death registries nor regular censuses. To figure out how many people were dying, Karume’s team traveled by car, boat, motorcycle, and foot to conduct interviews across the country. When they analyzed their survey data, they estimated that nearly 6 percent of CAR’s population died within 2022, in a country with a median age around 15. Scaling for population size, this toll would amount to a loss of more than two New York Cities. And yet, the world outside of Africa is barely aware that CAR is a country. The title of the team’s report asks: “How can we not know?”

Here is more, by Amy Maxmen, via Dylan Matthews.

What are the actual dangers of advanced AI?

That is the focus of my latest Bloomberg column, 2x the normal length.  I cannot cover all the points, but here is one excerpt:

The larger theme is becoming evident: AI will radically disrupt power relations in society.

AI may severely limit, for instance, the status and earnings of the so-called “wordcel” class. It will displace many jobs that deal with words and symbols, or make them less lucrative, or just make those who hold them less influential. Knowing how to write well won’t be as valuable a skill five years from now, because AI can improve the quality of just about any text. Being bilingual (or tri- or quadrilingual, for that matter) will also be less useful, and that too has been a marker of highly educated status. Even if AIs can’t write better books than human authors, readers may prefer to spend their time talking to AIs rather than reading.

It is worth pausing to note how profound and unprecedented this development would be. For centuries, the Western world has awarded higher status to what I will call ideas people — those who are good at developing, expressing and putting into practice new ways of thinking. The Scientific and Industrial revolutions greatly increased the reach and influence of ideas people.

AI may put that trend into reverse.

And on arms races:

If I were to ask AI to sum up my worries about AI — I am confident it would do it well, but to be clear this is all my own work! — it might sound something like this: When dynamic technologies interact with static institutions, conflict is inevitable, and AI makes social disruption for the wordcel class and a higher-stakes arms race are more likely.

That last is the biggest problem, but it is also the unavoidable result of a world order based on nation-states. It is a race that the Western democracies and their allies have to manage and win. That is true regardless of the new technology in question: Today it is AI, but future arms races could concern solar-powered space weapons, faster missiles and nuclear weapons, or some yet-to-be-invented way of wreaking havoc on this planet and beyond. Yes, the US may lose some of these races, which makes it all the more important that it win this one — so it can use AI technologies as a counterweight to its deficiencies elsewhere.

In closing I will note for the nth time that rationalist and EA philosophies — which tend to downgrade the import of travel and cultural learning — are poorly suited for reasoning about foreign policy and foreign affairs.

My Conversation with Rebecca F. Kuang

Here is the audio, video, and transcript, here is the episode summary:

Rebecca F. Kuang just might change the way you think about fantasy and science fiction. Known for her best-selling books Babel and The Poppy War trilogy, Kuang combines a unique blend of historical richness and imaginative storytelling. At just 27, she’s already published five novels, and her compulsion to write has not abated even as she’s pursued advanced degrees at Oxford, Cambridge, and now Yale. Her latest book, Yellowface, was one of Tyler’s favorites in 2023.

She sat down with Tyler to discuss Chinese science-fiction, which work of fantasy she hopes will still be read in fifty years, which novels use footnotes well, how she’d change book publishing, what she enjoys about book tours, what to make of which Chinese fiction is read in the West, the differences between the three volumes of The Three Body Problem, what surprised her on her recent Taiwan trip, why novels are rarely co-authored, how debate influences her writing, how she’ll balance writing fiction with her academic pursuits, where she’ll travel next, and more.

Here is one excerpt:

COWEN: Why do you think that British imperialism worked so much better in Singapore and Hong Kong than most of the rest of the world?

KUANG: What do you mean by work so much better?

COWEN: Singapore today, per capita — it’s a richer nation than the United States. It’s hard to think, “I’d rather go back and redo that whole history.” If you’re a Singaporean today, I think most of them would say, “We’ll take what we got. It was far from perfect along the way, but it worked out very well for us.” People in Sierra Leone would not say the same thing, right?

Hong Kong did much better under Britain than it had done under China. Now that it’s back in the hands of China, it seems to be doing worse again, so it seems Hong Kong was better off under imperialism.

KUANG: It’s true that there is a lot of contemporary nostalgia for the colonial era, and that would take hours and hours to unpack. I guess I would say two things. The first is that I am very hesitant to make arguments about a historical counterfactual such as, “Oh, if it were not for the British Empire, would Singapore have the economy it does today?” Or “would Hong Kong have the culture it does today?” Because we don’t really know.

Also, I think these broad comparisons of colonial history are very hard to do, as well, because the methods of extraction and the pervasiveness and techniques of colonial rule were also different from place to place. It feels like a useless comparison to say, “Oh, why has Hong Kong prospered under British rule while India hasn’t?” Et cetera.

COWEN: It seems, if anywhere we know, it’s Hong Kong. You can look at Guangzhou — it’s a fairly close comparator. Until very recently, Hong Kong was much, much richer than Guangzhou. Without the British, it would be reasonable to assume living standards in Hong Kong would’ve been about those of the rest of Southern China, right? It would be weird to think it would be some extreme outlier. None others of those happened in the rest of China. Isn’t that close to a natural experiment? Not a controlled experiment, but a pretty clear comparison?

KUANG: Maybe. Again, I’m not a historian, so I don’t have a lot to say about this. I just think it’s pretty tricky to argue that places prospered solely due to British presence when, without the British, there are lots of alternate ways things could have gone, and we just don’t know.

Interesting throughout.

Two Updates on the Value of Vaccines

1) From the recent annual meeting of the American Society of Tropical Medicine & Hygiene (abstract 6949) we learn that the R21/Matrix-M malaria vaccine maintained it’s efficacy over 4 seasons.

…Importantly, maintained high efficacy over four malaria seasons with only four doses is demonstrated, with no concerns to date of rebound in those who have not received repeated booster doses of the malaria vaccine. These data show that the R21/MM vaccine could significantly reducing malaria cases and deaths in children living in malaria endemic areas by inducing well maintained protective immunity.

This is excellent news and further supports my call for rapid, emergency distribution of malaria vaccines.

2) Glennerster, Kelly, McMahon, and Snyder estimate the value of a universal coronavirus vaccine. The COVID vaccines have been very valuable (see our Science paper) but each new variant of concern causes a spike in death rates. As new variants emerge, we modify the vaccines but that takes time and happens only after the death rate spikes. In addition, no one is thrilled with boosters. A universal coronavirus vaccine, and there are dozens in the works, could preclude the need to adjust vaccines on the fly and avoid or greatly ameliorate the death spikes. Based on reduced US mortality alone, Glennerster et al. estimate that a universal vaccine would be very valuable–so much so that an Advance Market Commitment on the order of $6-$10 billion would easily pass a cost-benefit test even if it had just say a 40% chance of accelerating a universal vaccine.

As I said repeatedly during COVID, billions<<Trillions.

South Dakota is trying to hold on

Bihar is holding on:

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Rent Controls

Ryan Bourne has a good rundown on rent controls in Argentina. In 2020 Argentina introduced a relatively mild form of rent control; rent increases during tenancy were capped at a weighted average of inflation and wage growth, tenancy was a minimum of 3 years and it became very difficult to end a tenancy. In ordinary times, this might have had only mild negative effects but in a high inflation rate scenario everything was accelerated (and the controls got worse over time, most notably in 2023 rent increases were capped at the minimum of inflation and wage growth).

….The results of all this were predictable. Around the policy’s introduction, it’s estimated that 45% of landlords stopped renting to instead sell their properties, not least because most home sales were made in dollars [it was illegal to rent in dollars, AT]. A lot of landlords shifted to short-term rentals on AirBnB too. In 2019, Buenos Aires had 10,000 properties listed on AirBnB; now it’s over 29,500. There have thus been no end of stories about a rental housing crisis, with tenants unable to find rental accommodation, despite the Financial Times reporting late last year that energy use implies ‘one in seven homes’ in Buenos Aires, the capital, laid empty.

This supply crunch led to soaring rents. Bloomberg reported that rents jumped sharply after tenancy rent controls were announced, as landlords opted out of the market or front-loaded rent increases to protect against inflation. Having been falling in real terms through 2018 and 2019, and tracking inflation for most of the previous decade, rents in Buenos Aires grew at 1.7 times the pace of inflation in 2020, broadly tracked inflation in 2021 and 2022, and then accelerated much faster than inflation again in 2023 as the rate which rents could be increased within tenancies was tightened further to the lower of wage growth or inflation.

As a result, the average rent for a two bedroom apartment in Buenos Aires has surged from 18,000 pesos per month at the end of 2019 to 334,000 pesos today, far above the 210,000 pesos if prices had merely tracked broader inflation, as used to happen. This relative price hike obviously hurts the poor most, because they cannot easily afford deposits to buy homes, or more expensive shorter-term dollar rentals.

Controls on rents within tenancies also soured landlord-tenant relations, incentivising landlords to forgo expensive maintenance (thus allowing the value of the property to fall towards its regulated price or to encourage tenants to leave). Misallocation of properties was rife. Reports in Buenos Aires described friends having to share apartments further out of the city centre, meaning cramped conditions and longer commutes. Under such controls, people enjoying sub-market rents are incentivized to stay in properties ill-suited for them, while others must leave properties they can afford prematurely when rents adjust sharply before their wages rise.

Milei’s Decree 70/2023, translated as ‘Foundations for the Reconstruction of the Argentine Economy,’ eliminated rent controls, including allowing contracting in dollars. Even though it has been only a matter of months, early signs are very positive:

Already the reduced risks to landlords is leading a rebound in the rental supply. Broker Soledad Balayan has shown a 50% rise in notices for traditional rentals since the decree. A host of other sources, including the Argentine Real Estate Chamber, have confirmed large supply jumps. Perhaps unsurprisingly, reports show new rental prices falling, by between 20 and 30% so far.

Quick tour of Argentina’s fiscal deficit (from my email, anonymous author)

I won’t double indent, but this is not by me, though I agree with it:

“I agree with your read re Argentina’s history of fiscal stability. From this paper (unclear if the data is accurate), here is Argentina’s deficit from 1960 to 2016 or so:

[See Figure 3 here]

Notice 2003-2009 is the only time with a noticeable superavit (exports > imports, taxes > spending), which coincides with Kirchner. It happily coincided with booming soy prices and it was immediately followed by more public spending. Remember soy exports have their own special tax rate (retenciones + FX tax, ~double other exports). Here are soy prices (source):

[See Figure here]

Here is Carlos Pagni in 2009 covering the law that let the state spend as much as it pleased once again. This was only a few years after 2004, when the IMF had forced Argentina to pass Ley 25.917 constraining government spending and debt under GDP.

Also notice that the deficit continued after the hyperinflation of 1989-1990! Between the privatizations, Plan Bonex, and reduced social spending, Menem reduced inflation (and caused a recession for which he is resented to this day). Then Cavallo comes in with convertibilidad. This gets world bankers excited and the dollars start flowing back into Argentina but the fiscal deficit immediately resumes. That same Menem ran an ad campaign in 1999 partially based on infrastructure investments after his decade of deficit.

In other words, the Peronistas simply do not believe that too much spending leads to a crisis. They will always spend if allowed to. Argentina still lacks the institutions to prevent this.

Looking at the recent history of fiscal deficit, Milei can make two contributions:

Short-term: Cut spending before things explode. The Peronistas would’ve continued to print + spend, deepening the problems. Milei is already succeeding at this and will likely succeed while he remains in power. For example, he has cut some of the funding to the provinces, which will be forced to cut their spending. Some of them are already considering printing their own currency (paper bonds like the LECOP or Patacones from 2001). 

Long-term: Prevent future spending. This is what the Libertarians promise: remove the people that spend us to the ground for good. We should measure “historical success” by this measure. This is why dollarization is attractive: it prevents the state from printing money to fund its deficit. 

I have my hopes up but I don’t understand Argentinian institutions or history well enough to know if he can make progress on this. As a comparison, the Bank of England was founded in 1694 and became formally independent a few centuries later in 1997 (including an IMF intervention into fiscal spending as recent as 1976).”

Will Milei succeed in Argentina?

I give him a 30-40% chance, which is perhaps generous because I am rooting for him.  Bryan Caplan, who is more optimistic, offers some analysis and estimates that Milei needs to close a fiscal gap of about five percent of gdp.

I have two major worries.  First, if Milei approaches fiscal success, the opposing parties will think long and hard about whether they wish to enable further success.  Or will they instead prefer to see the Milei reforms crash and burn for fiscal reasons?  I don’t think they know themselves, but the history of politics in Argentina does not give special reason to be super-optimistic here.  You don’t have to believe the opposition will deliberately flush their country down the toilet, they just not might be convinced that further fiscal consolidation is needed, even if it is (surely they gotten this wrong a lot in the past).

Second, Argentina has not succeeded in obtaining fiscal stability in the past, not for a long time.  I disagree with this passage of Bryan’s:

The monetary and fiscal stabilization is very likely to work.  Argentina has faced far worse crises before: The hyperinflations of the 70s to the 90s multiplied prices 100 billion times.  That’s like turning a billion dollars into a penny.  Yet Argentinians ultimately overcame all these problems and more using the orthodox medicines of monetary restraint and fiscal responsibility.  Since even politicians who ideologically opposed these treatments ultimately endured their short-run costs, it is a safe bet that a libertarian economics professor will do the same.

That is a misread of the history.  One common tactic, for instance, is to do enough stabilization so that Argentina is “fiscally sound enough” at the peak of a commodity super-cycle.  Most recently, that super-cycle has been China buying lots from Argentina (no such positive wave from China will be coming again, not anytime soon at least).  When the positive real shocks subside, Argentina goes back into the fiscal hole.

In reality, past reforms never put the country on a sound fiscal footing, even if inflation rates were low for a while.

One scenario for now is that Argentina does enough so that it appears fiscally stable, and the recent discoveries of oil and gas — which will translate into government revenue — kick in to support a temporary status quo.  But within ten years the whole thing falls apart again.  Even if Milei wants to do more on the fiscal front to get past that point, it is not obvious that either voters or the legislature would support such further moves.

Those are two “pretty likely” scenarios in which Milei fails, and in neither case is it the fault of Milei.  As I mentioned above, the chances of success remain below fifty percent.