Saturday assorted links
Earth facts of the day
- Global call center headcount is 5.3% below its December 2023 peak, ending more than a decade of growth. It has fallen year over year for eight straight quarters, a decline that started in high-income countries and coincided with the rise of AI chatbots.
- Call center support is falling behind other white-collar work in the same countries. Before ChatGPT, call-center headcount tracked other office and administrative roles in middle-income countries. After its launch, however, call centers have stalled or declined while the rest of white-collar work has continued to grow.
- The better-paid white-collar roles in these middle-income countries are still growing, but most former call-center workers never reach them. Only 10.8% of those who move land in technical support, customer success, or software and data, where median pay rises 7% to 13%. Half end up in other customer service, sales, or office jobs, usually for less pay.
Here is more by Caelan Wilkie-Rogers.
California in-migration and out-migration
Long-run U.S. population movements have been driven more by natural amenities than by jobs, and California, rich in both uniform and complementary climates, should be a persistent net gainer of domestic migrants. It has instead lost residents to other states every year since about 1990. This paper argues that its amenities are unchanged and that the location rents they generate have been captured politically. Capture through a land tax would be borne by landowners and would move no one. Capture through mobile tax bases-above all a steeply progressive income tax-and through restrictions on housing supply does move people, and moves particular people. Where the revenue also finances redistribution, high earners pay far more than the value of the services they receive, which pushes them out on a second count; the income tax also raises the pre-tax wages firms must pay, so jobs leave with households. Proposition 13 shifts capture onto mobile tax bases and locks long-tenured owners in place, so observed out-migration understates the underlying pressure. Internal Revenue Service data show that in 2022-23 California’s out-migrants outnumbered its in-migrants by 40 percent overall but by 64 percent among households with incomes of $200,000 or more, a pattern reversed in low-tax states. A simple cross-state comparison, which cannot hold production advantages constant, shows no relation between tax burdens and natural amenities, suggesting that competition among amenity-rich states limits capture; California, which taxes well beyond what its neighbors charge, loses residents disproportionately to them. Border comparisons and data on homeowners’ length of residence are consistent with the argument.
Here is more from Philiip E. Graves, via the excellent Kevin Lewis.
The origin of risk
From the QJE, by Alexandr Kopytov, Mathieu Taschereau-Dumouchel, and Zebang Xu:
We propose a tractable model in which risk, at both the micro and macro levels, is endogenous and driven by incentives. In the model, each firm chooses the mean and the variance of its productivity process, as well as how it covaries with the productivity of other firms. Aggregate risk arises when firms select productivity processes that are correlated with one another. The theory predicts that larger firms and those with lower markups are less volatile and less correlated with aggregate productivity. We find support for these predictions in the data. Through their impact on risk-taking decisions, distortions such as taxes and markups can make GDP more volatile in equilibrium. In a calibrated version of the model, removing distortions significantly reduces GDP volatility.
Fischer Black! (And my own earlier book Risk and Business Cycles). Via the excellent Kevin Lewis.
Ethiopia update
Ethiopia is the center of the world right now as it has returned to war. Ethiopian forces retook Mekelle from rebel forces, but the fighting has extended beyond Tigray. Eritrean forces allegedly entered Tigray, and Ethiopia responded with drone attacks. The war could go a number of ways. The war extends beyond Ethiopia. Sara Al-Saeed explains how Egypt extended its rivalry with Ethiopia across the Horn of Africa. Relations with Eritrea have soured. Pay attention to the Assab Port. Learn more about Abiy, internal divisions, and the regional struggle. This post provides a helpful update. Follow the conflict with ACLED. One thing is clear: The war is a betrayal of Tigray.
Friday assorted links
A Sentiment Analysis of Cowen, Hanson, Caplan, and Krugman
Supplied by Bryan Caplan, performed by ChatGPT, excerpt:
So Cowen isn’t well described as either “positive” or “negative.” A much better description is:
High appreciation + high concern + very low emotional agitation.
He seems to think there is an astonishing amount of wonderful stuff in the world and an astonishing number of things worth worrying about.
That combination is unusual.
Insightful throughout. And have a nice day!
On *Stubborn Attachments* and religion (from my email)
Hey Tyler
I consider Stubborn Attachments your most dogmatic and religious book. Pondering on it, here are my Abrahamic readings of it:
Jewish: Ten Commandments, obviously. While the bigger canon of Jewish laws tend to be overly conservative because people will fail following them anyway, the Ten Commandments are the laws the Jews should be stubbornly attached to. It’s easy to to rewrite the two guidelines of Stubborn Attachments as “Thou shalt … “. Another fun Jewish phrasing of the book would be “That which is good for the economy, is good for you. The rest is commentary”
Catholic: I think you yourself mentioned the Mormonic reading of the book. I’d add that the book is subtly a commentary on many philsophical debates, and revoking most of them. Just like the New Testament
Islamic: The absolute and stubbornness, but that is also there in the Jewish Ten Commandments.I bring two more subtle spiritual readings. There is an Islamic concept which says: in paradise, you will see the effect of every good deed you did, be it a direct or a very non-linear effect. It’s like the spiritual-and-butterfly-effect-ish definition of compounding growths magic. The second concept is “Barzakh”, in some theological readings, it’s a realm where both the dead, highly accomplished “living” souls and the unborn souls reside at the same time. I would liken this to your zero-discount rate concept for future generations.
What do you think?
Best
Hasan
Predictions for economics, given AI
With math essentially being delegated to OpenAI, here’s what I predict for economics and the social sciences more generally:
The top tier of research will just become better and it will be normal human-led research where AI is used for scale (e.g. conducting qualitative interviews with relevant populations, running behavioral interventions in the field, analyzing massive text data, etc.)
Field experiments will rise in value and generally making “connections” with firms and being able to run stuff (potentially testing AI pipelines) will be in high demand
Research with administrative data will become even more valuable, but the benefits might be concentrated among some prolific authors who are allowed by the government agencies to use local models to analyze the data at scale. PhD students can probably forget about it
Economic history will have a very exciting boom and there will be an enormous race and big rewards for digitizing archives as a source to both identify new research strategies and document new descriptive facts.
Review and verification systems will become massively improved with AI assistance and it will become standard practice to do a 360 review of the paper + code + data at the *submission* stage.
Research that in principle can already be almost completely outsourced to the AI (download and analyze public data, run simple survey experiments, write theory models) is in for a big shock. This would be very bad from the perspective of researchers who depend on this “bread and butter” research, but I think this type of work will just be outsourced to public agencies who can answer their own questions without the need for “peer-reviewed” research.
All of those make sense to me.
Thursday assorted links
2. How the math breakthroughs might matter.
3. Short proof of quasi-Riemann.
4. App for finding art exhibitions.
5. Podcast on African economic growth.
6. New and very good book: The Madrid Model: How Freedom and Openness Created an Economic Powerhouse, by Diego Sánchez de la Cruz.
How and why did the Victorians succeed?
From Samuel Hughes, in Works in Progress:
The elites of Victorian Britain operated differently. Their schools and universities were not terribly academic and had very little STEM. As adults, they got up late, drank a lot, and spent a remarkable share of their waking hours partying. They loved feasting, sports, holidays, dancing, and dressing up. Contrary to their stodgy reputation, they were probably a lot of fun.
Here is some further detail:
Most socially elite Victorian boys began formal education at the age of seven or eight, spending about five years in a ‘preparatory school’ before passing on to a ‘public school’ (which, to the enduring confusion of international observers, is a kind of elite private school). There was a hierarchy of public schools, with the nine ‘Clarendon schools’ at the top, and just one, Eton College, clearly at the apex. About 30 percent of nineteenth-century cabinet ministers and 40 percent of prime ministers were Old Etonians.
Most students at both preparatory and public schools were boarders, meaning that elite Victorians were generally sent away from home by the age of eight and spent their childhoods more with peers than with family. In this respect they were distinctive even in their own time: elite families in continental Europe and the United States were far more likely to keep their children at home and educate them at small local private schools. It is plausible that this contributed to the lack of subnational loyalties in the British elite, in contrast to the distinct elites of, for example, the Southern United States, Catalonia in Spain, or Hungary in the Austrian Empire.
Nor did the Victorians wake up early in the morning. Recommended, there is much more at the link, though the answer to the question remains somewhat of a mystery to me.
What I’ve been reading
1. Begoña Gómez Urzaiz, The Abandoners: On Mothers and Monsters. A wonderful book about mothers who abandon their children, and properly unsentimental. You will never think about Muriel Spark the same way again. Vashti Bunyan gets a section too. Recommended.
2. Evan Gershkovich, This Cursed Beautiful Land: A Russian-American Story. Yes he is the WSJ reporter who was arrested by the secret service in Putin’s Russia and held for eighteen months before being traded back home. He starts off naive, but does not finish that way. A compelling read, with good background information on what it is like to live in Russia in recent times, namely early years of the war with Ukraine. In prison it seems he was treated better than most. Excerpt: “I remembered what Eugenia Ginzburghad written about her two years in a maximum-security Yaroslavl prison before being sent to the Gulag — that during this period she was the best version of herself, at her most patient, kind, and thoughtful.”
3. Reinier de Graaf, architect, verb: The New Language of Building. A fun read, with chapters on the various prizes in architecture, Vancouver and city liveability, Richard Florida, and more. The book closes with a fun list of b.s. terms often heard from both academics and bureaucrats.
4. China Mieville, The Rouse. This novel is 1200 pp. plus, with pretty big pages, and I am on p.350 or so. It seems very good. At what point can I judge it? Can it sustain itself? Is “ah, but it fell apart on p.1137” actually a possibility? Past what page number is it in the clear? I guess I will find out.
Wednesday assorted links
1. Palo Alto Networks (cybersecurity firm, check out YTD).
2. OAI doing math again. Quasi-Riemann! And just one metric of import.
3. The AI agents pitching literary magazines.
4. Redux of my 2022 post on the effective altruists.
Against Laissez-Faire Democracy
In a new paper, Brennan and Freiman argue persuasively that:
the arguments against laissez-faire capitalism apply in a rather straight way against laissez-faire democracy. This should be a rather startling result, considering that laissez-faire capitalism is widely rejected, yet laissez-faire democracy is widely accepted.
All the typical market failure arguments–externalities, asymmetric information, principal-agent problems, behavioral issues–apply to democracy. For example:
democracies also suffer from obvious externality problems. Indeed, this is the key difference between markets and politics. Market decisions are usually and mostly internalized; negative externalities are seen as an anomaly to be corrected. Political decisions are by nature public. For instance, about 37% of the eligible
voting public, and 26% of the entire population of the UK voted in favour of Brexit, but the effects of Brexit are borne by everyone else, including losing voters, eligible voters who abstained, children and other citizens ineligible to vote, future generations, and foreigners.…The problem is similar to the pollution of individual automobile drivers or airline passengers. We drive too much and pollute too much because we bear the benefits of these actions but pass the costs onto others. Individually we matter little but collectively we matter a great deal. If externality regulation is prima facie justified in the case of pollution, it is prima facie justified in the case of voting.
They go on to suggest regulations that might apply to democracy. Noting first that:
…pretty much everyone already accepts some government actions which are plausibly seen as vote or democratic regulation. For instance, some issues are put directly to voters, while others are left to elected leaders, while others are left to judges and bureaucracies, and still others are removed from political consideration entirely. The timing and place of elections, who is permitted to vote (at what age), who is permitted to run for office, and so on are kinds of regulation. Government funding of public education is in part meant to be a non-laissez-faire subsidy meant to increase voter competence. Many readers are likely comfortable with government regulation of campaign donations, campaign expenditures and even which kinds of speech are permitted. Probably almost all readers reject straight up markets in votes (Freiman 2014). Each of these things is a kind of government regulation of democracy which inhibits laissez-faire democracy.
The authors sketch possible regulations while stipulating, for the sake of argument, universal, equal suffrage—no weighted votes or knowledge tests for voting eligibility. Possibilities include paying citizens to pass a voluntary civics exam; tracking campaign promises and fining deceptive claims; regulating political advertisements more like drug advertisements; and requiring supermajorities for certain decisions. See the paper for more.
You may object that these regulations would be captured by special interests, be administered by biased officials, or have unintended consequences. Indeed, welcome to the argument for laissez-faire.
Texas-Canada Fact of the Day
Texas produces more than Canada with three quarters of the population. Rough numbers for 2025:
| Texas | Canada | Texas / Canada | |
|---|---|---|---|
| Population | 31.7 million | 41.7 million | 0.76 |
| GDP, nominal (US$) | $2.9 trillion | $2.3 trillion | 1.27 |
| GDP per capita, nominal | $91,500 | $55,700 | 1.64 |
| GDP per capita, PPP | $94,000 | $66,700 | 1.41 |
| GDP, PPP (int’l $) | $3.0 trillion | $2.75 trillion | 1.09 |
Sources: BEA (Texas GDP, preliminary 2025; regional price parity), Census Bureau (Texas population), World Bank and IMF (Canada). Texas PPP figures divide nominal GDP by the BEA regional price parity.
Hat tip: Chris Powers.