Category: Current Affairs
Andrew Hall is on a roll
He is one of the new(ish) thinkers on the rise, here is his latest piece. Excerpt:
For most of the past decade, anti-billionaire language was a niche product. Democratic emails invoked billionaires in the mid-single digits through 2017 and 2018, spiked briefly to around 14 percent during the Warren and Sanders primary surge in 2019, and then settled back down—through the entire Biden presidency, the billionaire appeared in roughly one of every twenty to twenty-five Democratic fundraising emails, barely more than in Republican ones.
Then came January 2025. In the weeks after an inauguration that seated tech CEOs in the front row and the dizzying drama of Elon Musk’s ill-fated DOGE experiment, billionaire mentions in Democratic emails quadrupled, peaking above 20 percent of all emails sent and holding around 15 percent ever since. Anti-billionaire fundraising tactics are now a mainstay of Democratic messaging.
Yes, billionaire derangement syndrome is now a thing. As a side note, I was told that Andrew is the son of the great economist Robert E. Hall of Stanford.
Just wondering what the correct model of Iran is here
Prior to the war, I linked to a tweet from Matt Yglesias which explained why Matt opposed the war, and I expressed my agreement with his stance. While I feel plenty has gone on which I do not observe, I can report that the course of the war did not change my initial assessment.
Then I read many, many commentators saying how good the final deal was for Iran, and what a major loss it was for Trump. I was never sure I understood all of the parameters of the full deal, but still I did not hold any directly contrary opinion to that.
And now I see Iran is attacking ships in the Strait again, talking openly and brazenly about building nuclear weapons, and making plans to have tolls/fees on the Strait. To be clear, only the first of those surprises me, the latter two do not.
But given their reckless behavior in what is supposedly a wonderful war outcome for them, what is the correct way to model what they would have done had Trump and Netanyahu not attacked? And what is the correct way to model our optimal response to that? The terrible things that are happening now, do they not reflect an underlying equilibrium that would have emerged anyway within a few years’ time, or do we hold some hypothesis here of extreme path-dependence, suggesting the Iranian government would have been less bellicose on more or less a permanent basis? To cite one particular example of a possible equilibrium, if drones permanently alter the balance of power in the region, the ways in which their current position is now more aggressive might have emerged in any case. Or if the military have the strength to be the natural successors to the mullahs, might that not have happened over time anyway?
I do not see many war critics engaging with these questions openly and explicitly. It seems to me that the war critics implicitly are relying on a model of extreme path-dependence for Iran’s behavior. Had Trump not attacked, they might have stayed in a more peaceful groove for some while to come. That model might be true, but I do not feel I know enough about Iranian politics to make that judgment. Why are the others so convinced that model is true? Are they such well-informed experts? Is it that they have the properly sunny sense of the underlying Iranian disposition? Inquiring minds wish to know.
From Prediction Markets to Decision Markets and Beyond!
Arin Dube points to a great illustration of the power of prediction markets. Yesterday due to a new scandal the probability that Graham Platner would drop out of the Maine Democratic primary exploded from 9% to 96% (+87 percentage points). At the same time, the probability that the Democrats would win the election jumped by about 9 percentage points, from 54% to 63%. What does this tell you?
The market is signaling that Platner reduces the Democrats’ chances of victory. We can be more precise. If an 87-point increase in the probability of dropping out gets you 9 points of winning, then a 100% chance of dropping out implies a gain of 9/0.87 ≈ 10.3 percentage points.
Thus the market’s best estimate is that Platner is reducing the Democrats’ chance of winning by about 10 percentage points (compared to an unknown replacement). That’s a pretty big number! Democrats should surely use this information to make better decisions.
Now, I have been a bit loose. We have implicitly assumed that the news mainly moved the probability of Platner dropping out, rather than independently changing the Democrats’ general-election prospects. The issue is we are trying to reverse engineer two conditional prices, P(win|drop) and P(win|stay), from one unconditional price, P(win), and its comovement with P(drop). It works pretty well here as an illustration but Robin Hanson’s idea is that we can do better yet by trading the conditionals instead of inferring them.
Hanson’s decision markets would run contracts of the form “pays $1 if Democrats win, conditional on Platner dropping out — bet refunded if he stays.” Plus the mirror contract conditioned on staying. The refund provision makes the price a conditional probability: a trader pricing the first contract doesn’t need any view on whether Platner drops out, only on how the race goes if he does. With this structure we would get cleaner estimates of the conditional probabilities–in this case whether the Democrats do better with Platner in or out–which is exactly what a decision maker needs.
We were able to plausibly reverse engineer our estimate because the market happened to move 87 points in a single day. But a decision market would have posted the number continuously, no scandal required. In other words, with decision markets in play, not just prediction markets, we could have seen how much Platner was costing the Democrats before the latest scandal hit—which is precisely when the information would have been most useful.
It’s been fun to see prediction markets catch on with the public but the world is still decades behind Hanson’s decision markets—let alone futarchy!
Wiesbaden notes
Who goes to Wiesbaden these days? The era of Russian nobles taking the cure here and gambling is long since gone. And yet here we are. The proximate cause of this trip is the desire to see Grigory Sokolov, one of the world’s great pianists and a cult figure of sorts. He rarely tours North America, maybe these days never as he is 76. The current program includes Beethoven’s fourth piano sonata, Beethoven’s Op.126 Bagetelles, and Schubert’s last piano sonata. How can one say no? Sokolov also was a favorite of Tom Schelling, I might add, especially his recording of The Art of the Fugue, in my view one of the best classical music recordings of all time.
Besides, I have long been a believer in semi-random excursions to mid-size, slightly neglected German cities. There remains a strong cultural federalism in Germany, and so you might see and hear wonderful things in many different parts of the country.
I perceived two difficult Wiesbadens. In one, if you walk through the cheaper part of the pedestrian zone in the evening, the city seems mostly Muslim. But if you walk around during the morning, the city seems mostly German. I might add that some of the younger Muslim women show signs of assimilating, at least based on how they dress and present themselves. The older women tend to stick with the headscarves.
Over the last twenty years, inflation-adjusted real estate prices in Wiesbaden have gone up about forty percent, an OK performance. At times the city “does not feel like Germany any more,” but I think it is holding on. The proportion of new building is roughly equal to the population growth, so I do not think this price effect is a NIMBY effect. Rather it reflects the fact that Wiesbaden is still a pretty nice place to live. that said, in some significant ways Germany in the traditional sense is failing to reproduce itself.
It was stunning to me to discover how hard it is, in most of the downtown, to find plain, ordinary German food. At any price level. There is no current equivalent of Wienerwald or Nordsee to be seen, never mind a decent Wiener Schnitzel.
Much of Wiesbaden was destroyed and rebuilt, but the best fifteen or twenty buildings show the previous wealth and splendor to good effect. You will see these gems walking around, though only periodically. There is also an old Roman wall and a moving, more recent Holocaust memorial.
Most German ice cream just isn’t that good, so try L’Art Sucre for something French.
Museum Reinhard Ernst is the new institution in town, and it specializes in color field abstract art. The building is impressive, but the collection is weak except for a few Stellas. Why organize a museum around that basis unless the underlying collection is super strong in that area? This one is not. I can forgive the absence of the expensive American Ellsworth Kelly, but no Blinky Palermo or Günther Förg?
Nonetheless their restrooms might forestall this kind of Larry David conflict:
(At Museum Ludwig in Köln, by the way, you get the discount for being disabled only if you have “fifty degrees of disability,” however they might measure that. Slight disabilities are not enough, you must be truly “schwerbehinderte,” as judged by the state, heaven forbid the museum rely on the honor system.)
Museum Wiesbaden in contrast was an unexpected delight. Although it is mainly a natural history museum, they have one of the world’s best collections of Art Nouveau and the single best Jawlensky collection, and you can have these all to yourself. Very few people seem to go there.
As for the economy, here are some Germany facts of the day. Yet Germany continues, and visits remain a source of pleasure and interest.
Sokolov, by the way, played six encores. Where should the Germany trip target next year?
The Troubled History of Government Equity in Technology
Even though Germany privatized Deutsche Telekom in 1996, the federal government retained a substantial ownership stake. This partial state ownership status, which remains to this day, presents a textbook example of how this type of arrangement distorts incentives and delays the competitive dynamism necessary for technological progress.
Through the late 1990s and into the 2000s, Deutsche Telekom was buttressed by its privileged position and implicit government backing and leveraged this support to resist infrastructure competition. Rather than aggressively deploying broadband in order to compete with rivals, the company lobbied for regulatory arrangements that protected its legacy copper network. As a result, Germany—one of the world’s largest economies and a hub of engineering excellence—consistently trailed other European competitors in broadband deployment. To see German broadband stagnate while the competitive markets in Scandinavia and other European countries surged ahead was particularly jarring, as Germany had directly linked its economy to workplace digitization.
Germany’s broadband woes did not result from a lack of capital or engineering talent at Deutsche Telekom. Instead, government ownership produced a fundamental alteration of the company’s incentive structure. With state backing, Deutsche Telekom had fewer reasons to take risks, cannibalize its own infrastructure, or accept short-term losses in favor of long-term technological leadership and more reasons to cultivate political relationships that protected their existing revenue streams. This dynamic is reliably produced by partial government ownership of private companies.
Why we love this country
A Free Press feature for the 250th, here is my entry:
Tyler Cowen can’t decide, so he picks about 20 things instead.
My favorite thing about America is that I do not have a single favorite thing. We have the NBA (with a Toronto team too), the world’s best AI models, Alexander Calder sculptures, a few wonderful R.E.M. albums, southern Utah, the world’s best Constitution, lots of air-conditioning, sausage in southwest Louisiana, the infield fly rule in baseball, Winslow Homer, Sioux Plains drawings and Navajo blankets, the music of Chuck Berry and Brian Wilson, cheeseburgers, deep capital markets, the world’s best universities, the Museum of Modern Art, Chattanooga, Tennessee, lots of big airports, the north rim of the Grand Canyon, red cardinals and blue jays, about two dozen cities and towns named Paris, self-driving vehicles, not just one but two Dakotas, three branches of government (I hope not four), and the best set of immigrants in the world. And that is just scratching the surface.
The other contributors are notable as expected.
The most profitable crypto investors and firms
Here is the source. Here is from the editors at The Free Press. Here is more from Mene Ukueberuwa.
How Britain Became as Poor as Mississippi
How Britain Became as Poor as Mississippi is a good piece in the Atlantic by Idrees Kahloon filled with colorful anecdotes of a nation in decline:
The health service now has to spend more money settling maternity-malpractice claims than it does on actually providing maternity care. Many Brits can neither obtain an appointment with a publicly funded dentist nor afford a private one; in a 2023 survey, one in 10 reported doing DIY dental work, in extreme cases extracting their own teeth or gluing broken crowns back together.
Incomes can be shockingly low: Junior doctors recently went on strike for the 15th time in three years over their salaries, which start at just £38,800; the median salary for British civil servants is £35,680. In April, amid the Iran conflict, the Daily Mail pounced on Prime Minister Keir Starmer for vacationing in Valencia, Spain, at what the tabloid described as a luxury hotel, costing £200 a night.
Americans are likely to come away a bit smug, especially as Independence Day approaches and Europeans are enjoying our giant stadiums and central air conditioning. Look deeper, however, and Britain’s story becomes more uncomfortable. Does this sound familiar?
Recent plans to transform the country have rested in no small part on High Speed 2, a superfast rail line intended to connect London with Birmingham, Leeds, and Manchester. But since HS2 was proposed, in 2009, its costs have tripled, to more than £100 billion. It is the most expensive rail line in the world. (A special structure to protect a rare bat species near the rail line in Buckinghamshire required 8,000 permits and was built at a cost of £216 million.) The most important sections of the proposed route have been lopped off. The rump line—going from Birmingham, Britain’s second-largest city, to not-quite-central London—may be finished by 2040…. HS2 has been delayed for so long that two swiftly built towers near the terminus now themselves look derelict and in need of demolition.
…Building infrastructure, or much of anything else, has become all but impossible in the United Kingdom. In addition to having the world’s most expensive (not yet built) train line, Britain also hosts the world’s most expensive (not yet built) nuclear-power plant, Hinkley Point C. Its environmental-impact assessment ran 31,401 pages; the plant will feature a £700 million “fish disco,” which will pulse sounds underwater to deter animals from its intake pipes.
Upon closer inspection, the United States looks a lot less like a shining city on a hill and a lot more like a declining Great Britain, appendaged with one or two dynamic sectors, most notably AI. The similarities are especially obvious in the retrograde solutions Britain has lumbered into, namely attacking immigrants and trade—Brexit being the equivalent of a high tariff regime. Nations in decline, like people, tend to lash out at others rather than deal with their real problems. Needless to say, neither immigrants nor trade explain Britain’s—or California’s—inability to build high-speed rail or other infrastructure.
It is discomforting to watch the birthplace of the Industrial Revolution, individual rights, and free speech—the nation that once built the railways, the steam engines, the factories that remade the world—lose the capacity to build much of anything, or even to tolerate people speaking their minds. In parallel, instead of dealing with our real problems—almost all of our creation—the right gets literally hysterical over symbolic culture-war questions like birthright citizenship, while the left nominates candidates with Marxist-Leninist sympathies. The abundance and progress movements are some of the few shining lights. It’s not too late. But Great Britain is a warning.
How will AI and the fertility crisis interact?
That is from my latest Free Press column, here is one excerpt:
Each individual will be seen as something special by the other humans. Public spaces will be emptier, so anyone out in public will attract more notice. If you are waiting in line at the movie theater, you will be more likely to start talking to the person next to you. After all, you already have had the option of talking to the AIs all day long.
It has long been the norm in American small towns that you say hi to the people you pass on the sidewalk, or perhaps start chatting with customers in your store who appear to be outsiders. Those kinds of practices will spread to the large cities of today, which will become like smaller towns due to lower population density.
Many of these humans will invest heavily in their appearances, in their charisma, and in their “vibes.” After all, the AIs will, and already do, perform so many useful informational functions. If you, as a human, wish to draw attention to yourself and be seen as noteworthy, you will have to specialize in the remaining human functions. That may include “touching grass,” giving warm and appropriate hugs, looking good or at least looking interesting, and having some kind of unique identity that either is visible upon meeting or which AI smart glasses will communicate during social interactions. (“This guy has sailed around the world three times and punched a shark on the nose.”)
The YouTube celebrity Clavicular has attracted a lot of ridicule for his “looksmaxxing,” which involves a lot of manipulation of his appearance and some plastic surgery. Like it or not, that is a harbinger of how some aspects of this future will operate. Clavicular has achieved nothing of note, except for being immediately recognizable for how he looks. For similar reasons, people are likely to pay more attention to how they dress, what kind of makeup they wear, and other aspects of their appearance, such as how tall they are and how much they weigh. Plastic surgery and the successor drugs to GLP-1s are likely to command even more interest than today.
If a person comes across as extremely nondescript, you might feel there is no reason to speak with that person instead of chatting with your AI. A lot of ordinary social interactions will become more like a gala, where everyone shows up wanting to look a very particular way to draw attention.
To inhabitants of 2026, that might sound stupid, undesirable, and ridiculous. I do not love the thought myself. Yet people today care much more about how they look, and can do much more about it, than could people in medieval times. We are used to those differences, and few of us wish to go back to earlier times. People in this future may well feel the same way.
There are other interesting points at the link.
Noah Smith on negative emotional contagion
Every movement in 2020s America is defined not by what they want, but by who they hate.
Rightists: Immigrants
Leftists: Israel
Intellectual liberals: Rich techbros
Here is the link, in the last six months or so I have noticed all these trends getting worse. Praise goes to all those who avoid negative emotional contagion, you will prove the saviors of our civilization.
What should I ask Daron Acemoglu?
Yes, I will be doing a Conversation with him. Obviously Acemoglu has published plenty, but likely this chat will focus on his recent writings and pronouncements on AI, and most of all his forthcoming book What Happened to Liberal Democracy? Remaking a Politics of Shared Prosperity. So what should I ask him?
Azeem Azhar (and others) on the state of the AI economy
Due to travel I have not had time to read this detailed report, but it is getting very good reviews
Works in Progress: Grid Connection Auctions
The latest issue of Works in Progress is superb. Every article is interesting.
Chris Gillett points out something surprising: the US has plenty of electricity generation capacity ready to go, the problem is connecting it to the grid. Grid connection is complicated because on the grid, supply must equal demand at every moment in time. Even without speeding the process, however, we could get more power connected to the grid if we rationalized the ordering of connections.
The main flaw of the interconnection process is that it uses a first-come, first-served queue. This means that high-priority requests can spend years stuck at the back of the line behind other less important ones.
In essence, we have an airport congestion problem in which small Cessnas can bump 747s. Auctions for connection rights are the solution, as pointed out for airports by Vickrey and the classic paper by Rassenti, Smith and Bulfin. Gillett also emphasizes that some loads should be allowed to connect on a flexible basis: if a data center can disconnect or use backup power during the few peak hours each year, it should not have to wait years for firm service.
Gillett also has a very nice explanation of how market prices balance electricity from different sources:
Market prices signal to power plant developers about levels of supply and demand. In the same way, prices balance different energy sources based on the strengths and weaknesses of each. For instance, as more solar panels are built, the value (and therefore price) of power during the middle of the day, when the sun is shining most, adjusts downward. From December 2020 to September 2025, maximum solar output in ERCOT increased from 4 to 29.8 gigawatts. And from 2020 to 2025, the value of power at 1pm relative to the highest-priced hour decreased from 92.9 percent to 38.7 percent. As one technology type becomes overbuilt, prices reflect that and developers react accordingly.
The evolving daily price shape in response to the abundance of solar energy was a signal that the grid needed storage capacity, and power plant developers responded. From 2020 to October 2025, ERCOT went from having almost no battery storage to a combined battery discharge of 8.6 gigawatts. The same process has played out in California and many European markets.
Aaron Levie on current implicit AI regulation
We now have de facto AI regulation. It’s not obvious why from here on out models that have certain levels of capability or are trained on certain compute sizes won’t have to be reviewed by the government before release.
Realistically, as AI models became more and more powerful this was going to be inevitable (I think it’s too early, but here we are). So now it’s mostly just interesting to think about the implications and scenarios from here. A few would be:
* America gets to control who gets access to frontier intelligence and when. This generally works as long as we remain at the frontier at all times and don’t have a risk of being surpassed. At the moment we have a clear lead in frontier intelligence so this is a good bet, but lots of motivated parties would love to change that.
* This likely creates backlog of AI releases which means that we will see less rapid fire back and forth jumps in model progress. Bull/fine case is that we just get bigger step functions per release at a slower rate and we end up at the same point we would have. Bear case is those incremental smaller jumps were necessary for the continued flywheel of innovation.
* Other countries likely have even more incentive to at least hedge their bets with sovereign AI strategies so aren’t dependent on access to US AI all times. Previously this was relatively moot because the alternative wasn’t good enough, but that could change out of necessity and what we’re seeing in China.
* Open weights obviously a big winner here as it becomes what likely sovereign AI gets built out on, and what (for now) can still be released to the market without the same controls. One interesting question would be how regulation eventually extends to open models, which would have its own set of long term consequences.
Anyway some big updates to everyone’s mental models of AI regulation as a result of the capabilities we’re now seeing in AI. Wild times.
Here is the link. I would say I have long thought something like this was coming, but am pleased we got in so much early progress “under the wire” up until now. And here is more from Aaron.
What should the UAP Scientific Advisory Board do?
There are more and more frauds, charlatans, and lunatics entering this area of inquiry. It is important to stay disciplined on data-driven questions, most importantly to what extent are released (and unreleased) videos backed by radar, satellite, eyewitness and other forms of confirming evidence? By confirming, I do not mean “confirming they are aliens,” rather I mean “confirming they are real phenomena and not illusions of various kinds.”
Do not focus the discourse on aliens, rather focus on whether the phenomena are real. If they are confirmed as real, as many insiders insist, they we can return to debating what they might be. And focusing on concrete evidence is something a committee can be relatively good at. Trying to find agreement on “aliens” does not fall into that same category.