What exactly is the national security argument here?

Janet Yellen, the US treasury secretary, has urged the EU to intervene urgently to dampen the growing export levels of Chinese cut-price green technology including solar panels and wind turbines, pushing European leaders to move to a full-scale trade war.

Here is the full story.  And from the FT two days ago: “A number of major European power companies have scaled back or are reviewing their targets to develop renewable energy because of high costs…”  Where again is the net national security argument?  The biggest risk is that China will stop sending future wind turbines to Germany?  Which is somewhat in China’s lap in any case?  And according to GPT-4o those turbines have an average life of 20-25 years?  C’mon people, we are not stupid…

Tuesday assorted links

1. Anthony Edwards jersey for sale at Sotheby’s at 20k.

2. On the disbanding of AI safety operations.

3. On the heritability of fertility, more from Robin Hanson.  And Cremiaux differs.

4. It seems the House Republicans’ crypto bill will proceed.  Maybe that is why ether was up 23% yesterday?

5. The growing importance of desalination.

6. “Our results consistently show fewer childcare regulations are associated with smaller fertility gaps.

7. Again, a generative AI directory of EV winners, by Nabeel.

8. TNSSjobs, or is this manufacturing?:

Cross-border gunshot arbitrage markets in everything, Jean Baudrillard gone wrong edition

Federal prosecutors on Friday announced charges against five people in connection with a Chicago-based scheme that staged armed robberies so the purported victims could apply for U.S. immigration visas reserved for legitimate crime victims…

Officials believe hundreds of people, including some who traveled from out of town, posed as customers in dozens of businesses across Chicago and elsewhere, all hoping to win favorable immigration status by becoming “victims” of pre-arranged “armed robberies.”

During a staged hold-up in Bucktown last year, one of the “robbers” accidentally fired their gun, severely injuring a liquor store clerk, according to one source. During that caper alone, five “customers” were “robbed.”

Here is the full story, via Ian.

Is the internet bad for you?

A global, 16-year study1 of 2.4 million people has found that Internet use might boost measures of well-being, such as life satisfaction and sense of purpose — challenging the commonly held idea that Internet use has negative effects on people’s welfare.

“It’s an important piece of the puzzle on digital-media use and mental health,” says psychologist Markus Appel at the University of Würzburg in Germany. “If social media and Internet and mobile-phone use is really such a devastating force in our society, we should see it on this bird’s-eye view [study] — but we don’t.” Such concerns are typically related to behaviours linked to social-media use, such as cyberbullying, social-media addiction and body-image issues. But the best studies have so far shown small negative effects, if any2,3, of Internet use on well-being, says Appel.

From separate Gallup polls:

Pryzbylski and his colleagues analysed data on how Internet access was related to eight measures of well-being from the Gallup World Poll, conducted by analytics company Gallup, based in Washington DC. The data were collected annually from 2006 to 2021 from 1,000 people, aged 15 and above, in 168 countries, through phone or in-person interviews. The researchers controlled for factors that might affect Internet use and welfare, including income level, employment status, education level and health problems.

…The team found that, on average, people who had access to the Internet scored 8% higher on measures of life satisfaction, positive experiences and contentment with their social life, compared with people who lacked web access. Online activities can help people to learn new things and make friends, and this could contribute to the beneficial effects, suggests Appel.

Do note that in these latter data sets women ages 15-24 still are worse off from internet access.

Here is the Nature piece, via Clara B. Jones.

Emergent Ventures, 34th cohort

Kaavya Kumar, 16, Singapore, AI safety.

Asher Ellis, Yale, Indonesia studies and Pacific national security.

Sohi Patel and Teo Dimov, Yale, to work work on medical devices in the cardiovascular field.

Diego Sanchez de la Cruz, Madrid, to translate his new book on liberalism in Madrid into English.

Michael Ryan, Dublin, to build medical devices to monitor health.

Aden Nurie, 16, Tampa, to build an app to help people find soccer games.

Robert Davitt, Dublin/SF, starting a company to bring together visiting children with family and farm experiences.

Ulrike Nostitz, Dublin, to build out an Irish space law association.

Onno Eric Blom and Vinzenz Ziesemer, Netherlands, For a Dutch progress studies institute and a study on Dutch tech policy.

Katherine He, Yale, project to use LLMs to read and interpret legal codes.

Dan Schulz, San Francisco, podcasting.

Andrew Fang, Stanford, AI and real estate data project.

Ivan Zhang, San Francisco, AI safety.

Samuel Cottrell VI, Bay Area, general career support.

Julian Gough, Berlin/Ireland, book on black holes and the evolutionary theory of the universe.

Sean Jursnick, Denver,  architect, website, competition, and Medium essays for single-stair reform to improve building codes.

Julia Willemyns and David Lawrence, London, to support studies for improving UK science policy.

Adam Mastroianni, Ann Arbor, to run a Science House.

Jacob Mathew Rintamaki, Stanford, Nanotech.  Twitter here.

Agniv Sarkar, 17, San Francisco, neural nets.

Ukraine tranche:

Maria [Masha] O’Reilly, Kyiv, Instagram videos on Ukraine and its history.

Yanchuk Dmytro, Kyiv, to develop better methods for repairing electric station short circuits.

Yaroslava Okara, Kyiv/Kharkiv/LSE, to study internet communications, general career support.

Julia Lemesh, Boston, to send young Ukrainian talent to elite boarding schools abroad, Ukraine Global Scholars Foundation.

Monday assorted links

1. George Miller talks movies, silent movies, Mad Max, and Furiosa (New Yorker).

2. In this Greg Clark study, fertility seems not very heritable.

3. Mennonites smuggle illegal drugs from Mexico to Canada.

4. Yes the Fed is subject to political pressure.

5. “Ironically, the best hopes for a vibrant open source AI ecosystem might rest on the presence of a “rogue” technology giant, who might choose openness and engagement with smaller firms as a strategic weapon wielded against other incumbents.”  Link here.

6. Eel vs. octopus (NYT).

Innovation Matters

Innovation Matters a podcast of the United Nations Economic Cooperation and Integration Group interviews me on matters related to innovation.

If productivity growth had continued on the WWII-1973 track we would today be living in the world of 2097 rather than the world of 2024.

The education sector in the United States is underdoing a revolution. Since the pandemic we have had millions of children start homeschooling, private education with vouchers and charters are exploding. I hope with AI we can give every student a personal tutor, one who never gets tired, never gets grumpy.

In my view we should be subsidizing degrees with the greatest externalities and yet we are subsidizing degrees with the lowest wages and smallest externalities and we expect innovation out of that…no way, it’s not going to happen.

The US is a welfare-warfare state. We spend a tiny amount on innovation.

There can be multiple equilibria. If you focus on redistribution you can get low growth and then it makes sense to focus on redistribution because that is the only way to get more. But if you focus on innovation you can get high growth and then people are much less concerned with redistribution. Both equilibria can be stable. Which do we want?

Late Admissions

NYTimes: Glenn C. Loury’s new book, “Late Admissions,” is unlike any economist’s memoir I have ever read. Most don’t mention picking up streetwalkers. Or smoking crack in a faculty office at Harvard’s Kennedy School — or in an airplane at 30,000 feet. Or stealing a car. Or having sex on a beach in Israel with a mistress and attracting the attention of the Israel Defense Forces. Or later being arrested and charged with assaulting her. Or cuckolding a best friend….“Late Admissions” passes the Orwell Test. “An autobiography is only to be trusted when it reveals something disgraceful.”

Of course, even given all this, Loury has had a successful career as an economist and as a public intellectual.

Here’s a less salacious Conversations with Tyler and here is EconTalk both with Loury.

*Unit X*

The subtitle of this new and excellent book is How the Pentagon and Silicon Valley are Transforming the Art of War.  It is written not by journalists but two insiders to the process, namely Raj M. Shah and Christopher Kirchoff.  Here you can read about Eric Schmidt, Brendan McCord, Anduril, Palantir, and much more.

I am not yet finished with the book, in the meantime here is one short excerpt, one that sets the stage for much of what follows:

It turned out that before Silicon Valley tech could be used on the battlefield, we had to go to war to buy it.  We had to hack the Pentagon itself — its archaic acquisition procedures, which prevent moving money at Silicon Valley speed.  In Silicon Valley, deals are done in days.  The eighteen- to twenty-four month process for finalizing contracts used by most of the Pentagon was a nonstarter.  No startup CEO trying to book revenue can wait for the earth to circle the sun twice.  We needed a new way.

And this bit:

Ukraine avoided power interruptions in part because its over-engineered power grid boasts twice the capacity that the country needs — ironically, the system was originally designed by the Soviets to withstand a NATO attack.

The authors understand both the worlds of tech and bureaucracy very well, kudos to them.  Due out in July.

How Does Flexible Incentive Pay Affect Wage Rigidity?

Perhaps not as much as you might think:

We introduce dynamic incentive contracts into a model of inflation and unemployment dynamics. Our main result is that wage cyclicality from incentives neither affects the slope of the Phillips curve for prices nor dampens unemployment dynamics. The impulse response of unemployment in economies with flexible, procyclical incentive pay is first-order equivalent to that of economies with rigid wages. Likewise, the slope of the Phillips curve is the same in both economies. This equivalence is due to effort fluctuations, which render effective marginal costs rigid even if wages are flexible. Our calibrated model suggests that 46% of the wage cyclicality in the data arises from incentives, with the remainder attributable to bargaining and outside options. A standard model without incentives calibrated to weakly procyclical wages matches the impulse response of unemployment in our incentive pay model calibrated to strongly procyclical wages.

That is from a new and interesting paper by Meghana Gaur, John Grigsby, Jonathon Hazell, and Abdoulaye Ndiaye.  My take is that effort is often relatively fixed with personality and temperament, and thus more net flexibility results than this paper indicates.  Nonetheless this is an interesting result worthy of some pondering.

Sunday assorted links

1. The most notable person from each geographic area?

2. French post office releases scratch-and-sniff baguette stamp.

3. Skepticism about the new and higher estimates of the costs of climate change.  And here are some critical comments from Matt Kahn, most about lack of adjustment in individual behavior, as it is modeled.

4. Did humans settle the Chesapeake earlier than we had thought?  “To complicate matters, Lowery — who has been affiliated with the Smithsonian but does much of his work independently — presented the results of his study of Parsons Island in a 260-page manuscript posted online rather than in a traditional peer-reviewed journal.”

5. “On a recent trip to Sephora, 11-year-old Lincoln Rivera asked his mom for a $125 atomizer of Yves Saint Laurent eau de parfum.

He also covets scents from Jean Paul Gaultier, which he learned about from the animated movie “Megamind,” and Paco Rabanne (some of its cologne bottles are shaped like robots).

“I feel fine about how I smell,” said Lincoln, a fifth grader in Westchester County, N.Y., whose olfactory experimentation has so far been limited to deodorant. “But I could smell even better.”  Here is the NYT link.

6. Group chats rule the world.

7. Robin Hanson responds on prediction markets.

8. A 1930 take on what makes for a good party.

Why prediction markets are not popular

By Nick Whitaker and J. Zachary Mazlish, this is the best piece on this question so far.  Excerpt, noting I will not double indent:

“Rather than regulation, our explanation for the absence of widespread prediction markets is a straightforward demand-side story: there is little natural demand for prediction market contracts, as we observe in practice. We think that you can classify people who trade on markets into three groups,  each is largely uninterested in prediction markets.

  • Savers: who enter markets to build wealth. Prediction markets are not a natural savings device. They don’t attract money from pensions, 401(k)s, bank deposits, or brokerage accounts.
  • Gamblers: who enter markets for thrills. Prediction markets are not a natural gambling device, due to various factors including their long time horizons and often esoteric topics. They rarely attract sports bettors, day traders, or r/WallStreetBets users.
  • Sharps: who enter markets to profit from superior analysis. Without savers or gamblers, sharps who might enter the market to profit off superior analysis are not interested in participating. They also largely don’t need prediction markets to hedge their other positions.”

[TC again] The core argument is explained further at the link.  For instance:

“There is one important reason that prediction markets are not used by savers, and probably never will be. Prediction markets, unlike most asset markets, are zero-sum – in fact they are negative-sum, once you factor in platform fees. And if your money is in a prediction market, it can’t be invested in equities, or be earning interest in the bank, either. Every winner of a prediction market necessitates an equal and opposite loser. Securities investors with diversified portfolios can expect positive returns in the long term, because they are giving up their money for others to use to create output and wealth, in exchange for a share of what they create. That’s why responsible people have their pensions in stocks and bonds, rather than a diversified portfolio of sportsbooks. Positive-sum savings vehicles are far, far superior to zero-sum ones, for the simple reason that they will grow your savings in the long run.”

From the latest and very excellent issue of Works in Progress.

The Generalist interviews me

I was happy with how this turned out, here is one excerpt:

I think we’re overestimating the risks to American democracy. The intellectual class is way too pessimistic. They’re not used to it being rough and tumble, but it’s been that way for most of the country’s history. It’s correct to think that’s unpleasant. But by being polarized and shouting at each other, we actually resolve things and eventually move forward. Not always the right way. I don’t always like the decisions it makes. But I think American democracy is going to be fine.

Polarization has its benefits. In most cases, you say what you think, and sooner or later, someone wins. Abortion is very polarized, for example. I’m not saying which side you should think is correct, but states are re-examining it. Kansas recently voted to allow abortion, and Arizona is in the midst of a debate. Over time, it will be settled—one way or another. Slugging things out is underrated.

Meanwhile, being reasonable with your constituents is overrated. Look at Germany, which has non-ideological, non-polarized politics. They’ve gotten every decision wrong. Their whole strategy of buying cheap energy from Russia to sell to China was a huge blunder. They bet most of their economy on it, and neither of those two things will work out. They also have no military whatsoever. It’s not like, “Ok, they don’t spend enough.” They literally had troops that didn’t have rifles to train with and were forced to use broomsticks.

Germany is truly screwed and won’t face up to it. But when you listen to their politicians speak – and I do understand German – they always sound intelligent and reasonable. They could use a dose of polarization, but they’re afraid because of their history, which I get. But the more you look at their politics, the more you end up liking ours, I would say.

I would note that Germany’s various “centrist” or “coalition of the middle” regimes have brought us AfD, which is polarizing in the worst way and considered to be an extremist party worthy of being spied upon.

And this:

What craft are you spending a lifetime honing?

Shooting a basketball. I’ve done that for the longest, outside of eating and breathing. I’m just not very good at it.

I started doing it when I was about eight. We moved close to a house with a hoop, and all the other kids would gather there and play. It was a social thing, and I started doing it. I kept it going in all the different places I’ve lived. The only country I couldn’t keep the habit going was Germany. But when I was living in New Zealand, I made a special point of it. It’s good exercise, it’s relaxing, you get to be outside. It’s a little cold today, but I did it yesterday, and I’ll do it tomorrow.

It’s important to repeatedly do something you’re not that good at. Most successful people are good at what they do, but if that’s all they do, they lose humility. They find it harder to understand a big chunk of the world that doesn’t have their talent or is simply mediocre. It helps you keep things in perspective.

I’m not terrible at it. I have gotten better, even recently. But no one would say I’m really good.

Interesting throughout, as they like to say.

Saturday assorted links

1. The OpenAI library (NYT).

2. Switzerland fact of the day.  Trains.

3. Are women psychologists more censorious than male psychologists?

4. New meta-study on social media and mental health, research paper here.

5. African embassies: “Many of their embassies have just a handful of diplomats. Those diplomats often are underpaid; some take side jobs in Washington such as Uber or delivery drivers, or even at gas stations, according to a current and a former State Department official familiar with the issue.”

6. Vegetarian correlations?

7. Gary Charness, RIP.

Why is Africa so expensive?

Here is a very good Substack post by Oliver Kim, here is the key paragraph:

Intuitively, poorer countries have more of their labor forces and consumption baskets tied up in non-tradable subsistence agriculture, so when agricultural productivity grows, it lowers the price level—the exact reverse of the conventional Balassa-Samuelson relationship. But at some point, enough people have moved into manufacturing that agricultural productivity growth becomes less relevant, and the traditional upward-sloping Balassa-Samuelson relationship reasserts itself. Hence: a U-shape between incomes and prices.

A very good point, noting I would cite rent-seeking and local monopoly privilege — often more common in Africa than say Latin America or Southeast Asia — as well.

The Balassa-Samuelson relationship, by the way, is the notion that exchanges are determined by tradeables, where productivity differences are large, so non-tradeables (haircut in Mexico anyone? massage in Thailand?) are usually relatively cheap in poor, low-wage countries.  For a further explanation, do read the whole thing, and query GPT if you need to.