Studying with Ludwig Lachmann
Since I am in South Africa, I am reminded of my time studying with Ludwig Lachmann, the South African economist from University of the Witwatersrand. I was seventeen, and Lachmann teaching a graduate seminar at New York University. Someone (Richard Ebeling maybe?) had told me he was interesting, so I wanted to sit in on the seminar. I showed up, introduced myself to Lachmann, and asked if I could listen to the lectures. I obviously did not belong, but he was very gracious and said yes of course. He wore a suit and tie, had a very Old World manner, and he had been a Jewish refugee from Germany. He was 73 or so at the time, this was 1979.
His manner of speaking was very distinctive. Of course I now recognize the South African accent, but there is more to it than that.
Lachmann was best known for his connections to the Austrian School, as he was visiting at the NYU Austrian program at the time, under the aegis of Israel Kirzner. Nonetheless Austrian economics was not what I learned in the seminar.
On the first day, I heard plenty about Sraffa and Garegnani, and all that was new (and fascinating to me). Lachmann had studied with Werner Sombart, so I learned about the German historical school as well.
Lachmann also was my first teacher who made sense of Keynes for me, moving me away from obsessions with the hydraulic IS-LM interpretations of the General Theory. He flirted with views of cost-based pricing, brought me further into the kaleidic world of G.L.S. Shackle, and he insisted that a market economy had no overall tendency toward the constellation of a general equilibrium of prices and quantities. (He did believe that most though not all individual markets tended to equilibrate.) He inveighed against W.H. Hutt’s interpretation of Say’s Law, of course some of you here will know that Hutt also was South African. I kept on trying to read Hutt, to see if I could defend him against Lachmann’s critiques. I also imbibed Hutt’s economic critique of apartheid.
Lachmann did not talk about South Africa, other than to mention how long the journey to New York was. You may know that Israel Kirzner, another early mentor of mine, had South African roots as well. He also did not talk about South Africa.
“South African economics,” if you wish to call it that, played a significant role in my early intellectual development.
To this day, when I think about the economics of AI, and many other matters, Lachmann’s book Capital and its Structure is one of my go-to inspirations.
And I am still grateful to Lachmann for letting “a kid” sit in on his class. I paid avid attention.
Liberalism.org
…on March 12 we’ll be launching Liberalism.org, a new project from IHS [Institute for Humane Studies]. We’re aiming to build something akin to a modern-day coffee house of the liberal tradition—a digital gathering place where today’s most innovative liberal thinkers can weigh tradeoffs, think across differences, and apply liberal values to the challenges of today and the future.
The idea is to create a space that is serious but accessible—a home for exploring political, economic, intellectual, and civic freedom as a coherent and evolving tradition. We’re hoping it will serve as both an outlet for the ideas and a public-facing resource for those who care about the future of liberalism in its broad, classical sense.
Thursday assorted links
The alternate book universe that is South Africa
One of the things I like best about South Africa is how quickly one enters another and very different intellectual world. Walk into a good used book shop, such as Clarke’s in Cape Town, and you find a slew of quality history books and biographies you otherwise would not have heard of. Buy them and read them and be transported. So many of them exist apart from the usual dialogues. For instance, I recently bought
Nowhere else is a used book store more interesting, at least from an English-language perspective.
On the future of war
Murphy: What do you think we need to do to avoid major conflict over the next 25 years? Or do you think it can be avoided?
Cowen: I just think there’ll be more festering conflicts. Consider the difference between World War One and World War Two. World War two is very decisively settled. That’s quite rare in history. And you had a clear, small number of victors that largely agreed. And US & UK set things up. That didn’t happen after World War One.
Yeah, there was a League of Nations that didn’t work. It collapsed again. Future conflicts will be more like World War One than World War Two. Yeah, there’s too many nuclear weapons out there, for one thing. Are we really going to decisively defeat Russia in anything, ever? Who knows? But I wouldn’t count on it.
I’m very struck by this recent conflict between Thailand and Cambodia, which is a nothing burger, but I think people are making a mistake by ignoring it. What it’s showing us is that two countries can find it worthwhile to conduct a nothing burger war every now and then a few weeks, and it’s never really over.
It never really escalates. It just goes on and I think we’ll just see more of that. East Africa feels quite dangerous at the moment.
Murphy: I mean, Azerbaijan.
Cowen: Things like that. And they’ll just multiply and not quite. You know, some of them will be settled. But as a whole, they won’t be settled, and they won’t give birth to, like, the new UN, the new Bretton Woods, the new whatever. The A’s will build their own institutions. Let’s wish them luck.
That was recorded several months ago with Nebular, here are the links:
We’ve just published the video on YouTube, X, Spotify, and Apple Podcasts. We also published some extended show notes and the transcript on Substack.
On the meaning of Sirāt (with plenty of spoilers)
Sebastian Geoffroy:
I left the film perplexed, but after some thought I have an interpretation.
The film is a recognition that for most of the West, the story is about the individual, their actions, their decisions. However – for many in the non-Western world – the story is about things outside of their agency. The characters discover this in their journey, and the lack of character development is intentional – this is not about them, it is about the context of their life, where much is simply out of their control. The minefield is a pinnacle of this; who lives, who dies – totally random. Heck, even ending up in the minefield was random.
The ending scene is alluding to this – showing the cast amongst migrants, alluding to their recognition that they too have entered the stochastic nature of life. This probably leads to some frustration among Western viewers; they are looking for the individual story. Instead, this is a film about context, and those things out of our control.
As you like to say, context is that which is scarce.
Interested in your thoughts.
I would add two points. First, I think the film is suggesting that humanity as a whole is making the same mistakes these characters are. Pointless quests (the daughter is not really missing), recklessness, plans devoid of meaning, and excess attachment to various drugs. WWIII is going on in the background, on the radio, and in this film the group ends up with the African goat herders, not doing better than they are and also difficult to distinguish from them at first.
Second, many points in the plot parallel episodes from the Bible and the Quran, except the characters do not experience them with meaning. Abraham offers to sacrifice his son for God, but here the father loses his son for no reason whatsoever. There are hallucinations in the desert, forty days and forty nights of wandering, Job-like episodes, and more. Instead of suicide bombers, we have people who blow up randomly for no good reason at all.
Again, this movie would make little sense over streaming. Here is my earlier review. Here is commentary from the director in Spanish, I have not yet listened. Here is a short post on the holiness of the movie.
Wednesday assorted links
The Girl Scout culture that is New Jersey
A New Jersey Girl Scout troop has taken cookie sales to new heights, setting up shop right outside a popular cannabis dispensary.
A South Jersey-based troop recently teamed up with Daylite Dispensary in Mount Laurel to sell their beloved cookies at the cannabis shop this cookie season.
“You use cannabis, you get the munchies,” Daylite Dispensary owner Steve Cassidy told NJ.com “There’s a connection between snacks and cannabis and the fact that we don’t have to pretend that doesn’t exist anymore is really awesome.”
Daylite became Mount Laurel’s first dispensary when it opened in 2023. Cassidy said the idea was proposed back in 2024, but it was turned down by Girl Scouts of Central & Southern New Jersey, the Girl Scout council that oversees troops in the region.
When the idea reemerged ahead of this year’s cookie season, the troop was allowed to sell cookies at Daylite on a trial basis, according to Cassidy.
Here is the full story, via someone else.
Latin America and the Great Trade realignment
Citi sees Latin America as one of the main winners of the “great trade realignment”
A new Citi report positions Latin America as one of the main winners of what it calls the “great trade realignment”, as global supply chains shift toward a more multipolar structure driven by tariff volatility, AI adoption and nearshoring trends.
Trade flows from Latin America to ASEAN countries surged 82% between 2019 and 2024, while exports from China to the region grew 59% over the same period.
Latin America’s exports to North America also rose 43% in the same period.
Citi highlights the region’s growing role as a vital supplier of critical minerals to Asia’s electronics industry, an agricultural alternative to the United States for products like soybeans, and an increasingly attractive destination for foreign direct investment, which grew 12% in the first half of 2025 against a negative trend in other developed economies.
Here is the link.
The forthcoming Fuchsia Dunlop book
The Five Tastes: Delicious Recipes for Chinese Flavor, due out this fall. Via Joe Powers in the MR comments section. Hers are the very best Chinese cookbooks and they are also wonderful books more generally. She has been a CWT guest three times now. Let us hope a fourth episode is in order…
How frequent are price bubbles?
We examine the historical frequency of stock market booms, crashes, and bubbles in the United States from 1792 to 2024 using aggregate market data and industry-level portfolios. We define a bubble as a large boom followed by a crash that reverses the market’s prior gains. Bubbles are extremely rare. We extend the industry-level analysis of Greenwood, Shleifer, and You (2019) through 2024 and replicate their findings out of sample using Cowles Commission industry data from 1871 to 1938. Booms do not reliably predict crashes, but they do predict higher subsequent volatility, increasing the likelihood of both large gains and large losses.
That is from a new NBER working paper by William N. Goetzmann, Otto Manninen, and James Tyler.
Tuesday assorted links
1. Metropolitan Opera is trying to raise money (NYT).
2. How to write a LOTR bestseller (short video, with profanity).
Are the small tax havens really all that safe?
That is the theme of my latest Free Press column, excerpt:
If you are a Dubai resident, the chance that you will die in this conflict is very small. But you no longer can treat safety as something you do not have to think about. And you may face some uncertainty about when and how you can leave the country, a question that formerly was never in doubt. So two major advantages have vanished, even if the current conflict is settled soon. Another problem is that a substantial part of your supply of desalinated fresh water can be taken out by a well-placed missile.
More generally, the war underlines how tenuous the position of a place like Dubai is in the geopolitical order. I have enjoyed my three trips to Dubai, but I never felt entirely safe there on anything beyond a day-to-day basis. I always knew the place relied on protection from the United States and a certain degree of forbearance from its larger neighbors, including Saudi Arabia. Both Dubai and its larger encompassing unit, the United Arab Emirates, are extremely small.
And:
In most daily life, the small tax havens will feel safer than Cape Town. In the longer run, I am not entirely sure. My longer-run plans might be more robust in Cape Town. Or in Brazil. Or in Mexico. Those are all fairly dangerous places that nonetheless seem to have considerable macro stability in the longer run. South Africa has a pre-1930 history of taking in persecuted Jews from Europe and giving them an environment where they can thrive. Even the coming and going of apartheid, in 1948 and 1994, did not change South Africa’s high degree of security from foreign threats.
Dare I suggest that these larger places are more fun and also have more soul?
Worth a ponder.
I would much rather be exiled to Cape Town than to Dubai, all things considered, even assuming away the current conflict in the Middle East.
The trajectories of science and AI
From my podcast with Nebular:
Cowen: Mainly what they have done is tricked people. The Apollo program was a big trick. It was not intended as a trick. I’m pretty sure almost everyone behind it was quite sincere that it would lead to whatever. It was vague all along, but everyone was truly excited back then. I even remember those times, but it didn’t lead to what we were promised at all.
And you see that when you compare science fiction over time. So I think the norm is that new technology comes and people are tricked. Again, it doesn’t have to be a sinister, devious, conspiracy laden thing, but in fact, they’re tricked. And then it happens anyway. And then we clean up the mess and deal with it and move on to the next set of problems.
And that’s what I think it will be with AI as well.
Murphy: What is the trick with AI?
Cowen: It’s the old paradox. When you add grains of sugar to your coffee. Every extra grain is fine, or it may even taste better, but at some point, you’ve just added too many grains. So that’s the way it is with change. People use ChatGPT. It diagnoses your dog. Do I need to take the dog to the vet? What’s with this rash?
You take the photo…You get a great answer. Everyone’s happy. They’re not actually going to be happy at all the changes that will bring. And here I’m talking about positive ones. I’m not saying, oh, it’s going to kill us all. People just don’t like change that much. So they’ll be sold on the immediate, concrete things and end up seeing things happen where they feel there’s too much change because it will devalue their human capital, and we’ll adjust and get over it and move on to the next set of tricks. That’s my forecast.
Murphy: People don’t like change, but also people are bad at long term planning. Yeah. You’ve spoken before about how faith is a key requirement in terms of being able to plan over the long term. How do you bring that idea to policymakers?
Cowen: I don’t know, I think things will get pushed through for myopic reasons, like we must outpace China, which might even be true, to be clear, but it’s a somewhat myopic reason, and that will be the selling point. You know, I’ve read a lot of texts from the early days of the Industrial Revolution. Adam Smith is one of them, but there’s many others, and a lot of people are for what’s going on, they understand they will be richer, maybe healthier.
They do see the downsides, but they have a pretty decent perspective. But no one from then understood. You’d have this second order fossil fuel revolution, say the 1880s where just things explode and the world is very much different. And whether they would have liked that, you can debate, but they just didn’t see it at all.
We’re probably in a somewhat analogous position. I would say that the Second Industrial Revolution was the more important one. It was a very good thing, even though climate change is a big problem, but it really built the modern world. And with something like AI or any advance, there’s probably some second order version of it that’s coming in our equivalent of 1880 that we just don’t see, and it will be wonderful for us.
But if you told us, we’d be terrified. So how should you feel about myopia? I think as an intellectual, you should be willing to talk about it openly and honestly. But at the end of the day, I think myopia still will rule. And I’m not in a big panic about that.
To recap:
We’ve just published the video on YouTube, X, Spotify, and Apple Podcasts. We also published some extended show notes and the transcript on Substack.
Recent recordings of “big symphonies”
The Marek Janowski box of Bruckner symphonies I find to be the best Bruckner overall. And yes I do know many other versions, even Hermann Abendroth, though I cannot hold a candle to one MR reader I met recently who may know seventy or more versions of Bruckner’s 8th.
Vladimir Jurowski has recorded Maher 1, 2, 4, 8, and with 9 on the way and I read somewhere he will be doing the entire cycle. I expect these will end up as my set of choice.
Both are worthy of your notice, and they put to rest the myth that all the best conductors and orchestras operated in the now somewhat distant past.
On a related note, I flew to Pittsburgh recently to hear Honeck conduct Bruckner’s 8th (it is there I met the MR reader). I was amazed how good the overall performance was, and arguably Pittsburgh is now one of the two or three best orchestras in this country, at least for their favored repertoire. Go hear them if you can, Bruckner being their specialty.