The wisdom of Eli Dourado
How do “international efforts” work? Unlike most of the signatories of the letter, I have been a State Department advisor and have participated in multiple treaty negotiations. I have also been a member of technical committees for UN technical agencies.
The international sector is unbelievably dysfunctional. Every single treaty or international agreement is an opportunity for every participant to manipulate the much broader policy environment. Often the participants don’t care about the object of the agreement, and are instead trying to use the agreement as leverage for something else. I have seen countries use their limited leverage in multilateral agreements to try to kneecap American industry, get around sanctions, create a pretense of international justification for domestic illiberalism, or steer technology in an authoritarian direction.
The damage from this dysfunction is limited by the fact that there are zero major countries (and not that many smaller countries) who will actually bind themselves in meaningful ways that they don’t narrowly want. If a previously signed treaty turns out to be inconvenient, it is often subtly ignored or reinterpreted.
In addition, treaty delegations working on industrial issues generally reflect the full spectrum of special interests involved in an issue. A US AI treaty delegation might be led by a State Department ambassador, but he will be advised by representatives of the interagency, major labs, other major tech companies, tech investors, civil society, etc.
“International efforts,” therefore, is not a reassuring answer to the governance problem; it is the name of another enormous, unresolved governance problem.
Here is the full tweet.
The Anatomy of Cyber Risk
This paper uses computational linguistics to introduce a novel measure of firm-level cyber risk exposure based on the quarterly earnings calls of listed firms. Our measure covers more than 14,000 firms from over 90 countries between 2003 and 2025. The measure is validated using human auditors and a large language model. We show that cyber risk exposure affects stock returns and profits, is priced in the options market, predicts actual cyberattacks, and propagates from firm to sector level. Back-of-the-envelope estimates suggest that the global cost of cyber risk exposure is around $1 trillion per year.
That is from a recent paper by Rustam Jamilov, Hélène Rey, and Ahmed Tahoun, forthcoming in the Journal of Finance.
That the market prices cyber risk is a point we should not so readily forget. Is anyone arguing that recent market declines are due to higher perceived cyber risk? Does the distribution of these declines match that hypothesis? (Are we possibly seeing the opposite of what that hypothesis might predict, namely that those companies with the best potential defenses are suffering the most?) If the cyber risk cost per year had been about $1 trillion a year, what do we think it is now? Surely members of the rationality community will defer to the scientific methods of investigating these claims…
Thursday assorted links
2. Young adults are using AI to manage their social media feeds (WSJ).
3. What predicts an NBA Achilles tear?
4. LLM data set on changing cultural trends over the centuries.
5. Xi’an Famous Foods is coming to Clarendon.
6. If a German expressionist movie director had filmed a silent Odyssey in the 1920s.
An experiment for our schools
The aircraft are designed to distract their targets by flashing strobes, blaring sirens, spraying them with pepper gel, or ramming into them at 60 mph.
Here is the full piece. As I have been saying, be long countries where local crime is a major problem.
Forty interesting facts about Australia
Australia was the richest country on earth, per capita, for decades. After the 1850s gold rush, up until the 1890s depression, Australia had the highest per capita income in the world. In 1850, probably only the United Kingdom and the Netherlands sat above Australia, by about 20 per cent, with the United States 9 per cent below. After the gold rushes Australia passed both, and from 1860 to 1890 the gap over the United States ran at 25 or 30 per cent.
And:
A cow cost as much as £84 in 1796, about several years’ wages for an English labourer. Only government, or its military/civil officers, owned cattle and horses in 1796, which were extraordinarily hard to import in the first decade, having to survive the long distance from South Africa or India. In England, an ordinary cow would have cost around £10.
And:
John Stuart Mill and Harriet Taylor seriously discussed running off to Australia. Mill was an active supporter of the movement that founded South Australia, joining the South Australian Association. Harriet’s younger brother, Arthur Hardy, migrated to South Australia and became a pastoralist and politician there. Liberals hoped that South Australia would become a progressive leader in political and social equality. Indeed, South Australia became the first self-governing jurisdiction in the world to allow women to vote and stand for parliament, in 1895.
And:
Australia’s 1890s economic depression was worse than the 1930s Great Depression. Real GDP per capita fell by around 20 per cent over the 1890s, compared with a fall of only about 10 per cent over the 1930s. Unlike America, Australia’s banking system largely remained intact during the 1930s. In part, that is because Australian banks remembered the catastrophic banking collapse of the 1890s, fuelled by huge credit growth and lax standards, particularly in Victoria. Of the 64 deposit-taking institutions in Australia in 1891, 54 were closed by 1893. A severe drought made economic recover even more difficult.
All forty are interesting, by Andrew Kemp on his very good Australia Substack.
Reforms to the PhD?
The Trump administration is pairing top universities with corporate giants in an effort to steer traditional PhD programs toward national scientific priorities.
Today, the White House and National Science Foundation are announcing a $47 million pilot program to fund around 250 four-year doctorates in technical fields, starting this fall. Students in the pilot will be placed at an industry partner, where they will spend at least one year doing “practical research” that can go towards their dissertation. NSF’s investment will fund three years of these PhDs, with 31 universities and 20-plus companies funding the rest.
“About the same amount of basic research is done today in academia as in the private sector,” Michael Kratsios, the director of the White House Office of Science and Technology Policy, told Pirate Wires. “Over time, while the ecosystem has changed and different players have emerged where important scientific work is being done, the institutions which train our next generation of scientists have not really been updated.”
…The pilot represents a small fraction of the more than 45,000 science and engineering doctorates awarded annually — but the administration says it’s a “scalable model” that can expand to more universities and companies.
Here is the full story, I will pass along more details as I learn them.
What should I ask Jared Diamond?
Yes, I will be doing a Conversation with him. His whole career is fair game, though many of my questions will cover his forthcoming book Profits, Prophets, Coaches, and Kings (When) Do Leaders Matter?
From the Amazon summary: “Now, in Profits, Prophets, Coaches and Kings, he studies leaders throughout time to answer the question: do the actions of individuals truly influence history? Or is humanity subject to larger historical, technological, cultural, geographical forces, far beyond the influence of individuals, no matter how powerful they may seem?”
So what should I ask him?
Wednesday assorted links
1. Mark Zuckerberg on our AI future (WSJ).
2. Claims about beauty (recommended).
3. 26 charts of Australia in trouble.
4. Hans Moravec interview (right now ungated?).
5. Those new service sector therapist jobs end the fertility crisis too.
6. The Routledge Handbook of Classical Liberalism.
7. Profile of Reihan Salam (NYT).
Data on Chinese innovation
China’s technological progress in recent decades has been viewed with admiration, alarm, and (in some cases) doubt. To better understand the Chinese innovation ecosystem, we compile a dataset of almost 14 million domestic Chinese patent publications. We focus on the subset of critical technologies identified by the U.S. Department of Defense. Several surprising patterns emerge from the data: Chinese patenting is strongly associated with other measures of innovative progress; patents are not concentrated in corporate giants such as Huawei; universities have played a key role in innovation, much greater than state-owned enterprises or government-owned facilities; and fewer than one in ten Chinese critical technology patents involves an inventor with U.S. experience or training. Finally, using four text-based measures of patent quality, we show that the rise of Chinese patenting in critical technologies has not been associated with a decline in quality relative to the U.S. awards.
That is from a recent paper by Josh Lerner, Namrate Narain, Dimitris Papanikolaou, Amit Seru, and Zunda Winston Xu. Via the excellent Kevin Lewis.
You will learn to love AI writing
That is the theme of my latest Free Press article, excerpt:
But do I wish to eschew AI writing for the rest of my life? Absolutely not. Most of all, I want AI writing to get better, so it does not irritate me with its clichés and all too obvious identifying marks. I want AI writing that can fool me, and maybe sometimes I am already getting it.
Do you know Paul Simon’s lovely song “American Tune”? It is one of my favorites. A small percentage of listeners know that one of the core melodies is taken from Johann Sebastian Bach, namely the Passion Chorale from “St. Matthew Passion.” You could say Paul Simon is a plagiarist, though I would prefer not to use this term. He borrowed creatively, as do many other popular music artists.
Do many listeners care? No, although a few might feel a pang of musical nerd pride at learning of the association with Bach.
But wait, it gets worse yet. That melody does not come originally from Bach, but rather he in turn plagiarized a 1601 secular love song by Hans Leo Hassler, namely “Mein G’müt ist mir verwirret” (My feelings are confused). So the lineage is not even the glamorous one you might have imagined. If anything, “American Tune” sounds closer to the Hassler melody than to Bach’s adaptation.
Are you upset yet? Probably not, and that is good.
Someday we will feel the same way about text generated with the assistance of AI. We won’t care much where it came from, and much of the time we will not even know.
Recommended, and I hope the AIs like it too.
Congratulations to Ross D. and others
Ross Douthat, an opinion columnist at The New York Times, is leaving to join the CBS News program “60 Minutes” as a correspondent, the show’s executive producer said in a memo to staff on Tuesday.
Mr. Douthat is among a group of journalists joining for the show’s 59th season, which will premiere on Sept. 13. The writer Sebastian Junger and Gianna Toboni, a former Vice News correspondent, will become contributors, along with Trevor Phillips, a British journalist who joined CBS last month. Norah O’Donnell, the former anchor of “CBS Evening News,” will be a correspondent as well.
They are the first significant hires at the long-running Sunday program since CBS’s new editor in chief, Bari Weiss, orchestrated a shake-up that led to the departure of three top correspondents this spring, including the veteran journalist Scott Pelley.
Here is the full NYT story.
Tuesday assorted links
1. The economics of personal holding companies, including in the Nordics.
2. Jongkuch Mach is a good name for a very tall basketball player.
3. Can AI predict who will be the most important philosopher in 2046? For economics, the top pick of GPT Pro is Ludwig Straub, second choice is Stefanie Stantcheva. I like those selections, but perhaps they are more 2036 than 2046?
The AEA presidential election
AEA is the American Economics Association, and a new president is needed, here is the candidate and likely winner:
PINELOPI (PENNY) KOUJIANOU GOLDBERG, William Nordhaus Professor of Economics and Global Affairs, Yale University.
Statement of Purpose: I am honored to stand for President of the American Economic Association. Economics has long contributed powerful tools to understand human behavior, markets, institutions, and public policy, but the environment in which we conduct research, teach, and engage with society is evolving rapidly. New technologies, especially artificial intelligence, are reshaping research methods, classroom instruction, and the evaluation and dissemination of scholarship. These changes create exciting opportunities, but they also raise difficult questions about the future of peer review in our journals, transparency, incentives, and research and teaching standards more generally. The profession also faces broader challenges: maintaining rigorous, credible, and independent research, supporting young scholars in an increasingly uncertain academic environment, and ensuring that economics remains open to diverse perspectives, methods, and global talent. If elected, I hope to use my research, teaching, policy, and editorial experience to help address these challenges, while promoting the core values of our discipline.
Here is the link. Hilarious as always that there is only one candidate allowed (which model predicts this as optimal?), but for the first time I have seen a meaningful statement of purpose that I also like. That said, I would like to see her endorse my core proposal, namely turning over all submissions, referee reports, and revisions (anonymized is fine) to the major AI companies for use as training data. After all, such an act would further the mission of the AEA, right?
The Confucian fertility paradox
Total fertility rates in East Asia have fallen to levels without historical precedent, even though the region’s Confucian heritage long placed extraordinary emphasis on family continuity and large families. We argue that this “Confucian Fertility Paradox” dissolves once we separate two strands of the tradition and recognize that modernization affected them very differently. The pro-natal strand, built on lineage continuity, ancestor worship, and reliance on sons for old-age support, was gradually switched off as child mortality fell, incomes rose, women entered the labor force, and state pensions replaced the family as the main source of security in old age. What survived was the second strand: the veneration of education and of status won through examination success, rooted in the imperial examination tradition. Under modern conditions this surviving strand reverses sign with respect to its effect on fertility. Where the historical examination system rewarded having many sons so that one might succeed, the modern single-ranking tournament rewards concentrating resources on one or two intensively educated children, and the quantity/quality tradeoff turns a once pro-natal culture into a powerful engine of low fertility. Drawing on recent empirical evidence from China and Korea, we show how education competition becomes the channel through which traditional values now suppress childbearing. We explain why standard pro-natalist policies, such as removing birth restrictions or offering cash subsidies, accomplish little when the underlying problem is a competitive equilibrium in parental investment, and we argue that policies aimed at the source of the distortion, such as structural reform of educational pathways, hold more promise.
Here is the paper by Hanming Fang and Chang Liu. Usually I am suspicious of such explanations, as the low birth rates typically apply also to families who do not face such education/career considerations. Thailand? Indians in Singapore? Ethnic minorities in China? But I pass this along nonetheless, due to the importance of the topic. Via Glenn Mercer.
*Liberal Worlds: James Bryce and the Democratic Intellect*
A very good book, here is one excerpt that bears directly on a conversation I was just having:
He [Bryce] regretted the low quality of the Indian Civil Service: they were hard-working and motivated by a desire to promote the welfare of the Indian people, but ‘rather wanting in imagination and sympathy, less inspired by the extraordinary and unprecedented phenomena of the country than might have been expected.’ He went on: “Since the unhappy so-called Ilbert Bill there has been a marked change in the attitude of Europeans to natives, especially in Bengal; and the natives complain bitterly that the civilians as well as the military & the planters, treat them with arrogance & make them feel their social inferiority as well as political subordination.” He continued by saying that all he had seen made him certain that he had made the right decision in not pursuing a career in the Indian Civil Service.
The author is H.S. Jones, and I also learned a good deal about Bryce’s work on behalf of Armenia, a topic I had known nothing about. I am a big fan of Bryce’s The American Commonwealth book as an analysis of democracy, though of course I do not agree with all of the particulars. Bryce also was an early NIMBY proponent (even then), and played a large role in debates over the humanities, basically defending liberal education. He served as ambassador to the U.S. as well. His long (overlong?) Modern Democracies is in my Kindle queue to read.