Category: Current Affairs
What should I ask Julia Ioffe?
Yes, I will be doing a Conversation with her. She has a new and very good book out, namely Motherland: A Feminist History of Modern Russia. I will focus on that topic, but she has done much else as well. From Wikipedia:
…a Russian-born American journalist. Her articles have appeared in The Washington Post, The New York Times, The New Yorker, Foreign Policy, Forbes, Bloomberg Businessweek, The New Republic, Politico, and The Atlantic. Ioffe has appeared on television programs on MSNBC, CBS, PBS, and other news channels as a Russia expert. She is the Washington correspondent for the website Puck.
And here is Julia on Twitter. So what should I ask her?
What Davos (and Mark Carney) get wrong
That is the topic of my latest Free Press column, here is one excerpt:
Though Donald Trump seems to be calling off his latest trade war, the United States has indeed retreated from free trade with a new era of tariffs. It’s a development I rue. But Canada just opened its market to Chinese cars. So Trump did in fact find the recipe to nudge an oft-protectionist Canada toward freer trade, though it is the opposite of what he might have been wishing for. Soon, Canada will have access to better and cheaper electric cars than what we can get in the United States. And even if you think that spyware could make those cars a security risk in Washington, D.C., due to spying possibilities, I am less worried about their proliferation in Quebec and Nova Scotia. Keep them out of Ottawa if need be.
The European Union just worked out a free trade agreement, pending final approval, with Mercosur, a trade bloc encompassing hundreds of millions of people in South America, a region that is likely to be more economically important in the future. The EU also announced it is likely to strike a free trade agreement with India, the most populous nation in the world and one of its fastest-growing economies. However imperfect these agreements may turn out to be, has there been any recent short period with so much progress in free trade?
And this on Mark Carney:
Canadian prime minister Mark Carney’s speech on Tuesday garnered a lot of attention, but I think for the wrong reasons. He proclaimed the ability of “middle powers”—that is, Europe and countries like his own—to stand their ground against America and China, but he mentioned AI only in passing. He had no solution to an immediately pending world where Canada is quite dependent on advanced AI systems from American companies (often, incidentally, developed by Canadian researchers in the U.S.). That is likely to be the next major development in this North American relationship, and it will not increase the relative autonomy of Canada or of any other middle powers.
Carney has garnered praise for staking out such bold ground and standing up to Trump. The deeper reality is that Carney can “talk back” in the North American partnership because he knows America will defend Canada, including against Russia, no matter what. Most European countries cannot relax in the same manner, and thus they are often more deferential. What the reactions from Carney and the Europeans show is not any kind of growing independence for the middle powers, but rather a reality where you are either quite tethered to a major power—as Canada is to America—or you live in fear of being abandoned, which is the current status of much of Europe.
Recommended.
How Restrictive is U.S. Trade Policy?
This short note computes Trade Restrictiveness Index measures for current U.S. trade policy. Building on the ideas of Anderson and Neary (1996, 2005), the Trade Restrictiveness Index is the uniform tariff that leaves the U.S. consumer as well off as under actual policy. As of October 2025, U.S. trade policy is twice as restrictive as headline tariff numbers suggest. The Trade Restrictiveness Index is 23 percent, which stands in contrast to the 11 percent average tariff rate. Trade policy towards Canada and Mexico is two to three times more restrictive than average tariff rates suggest. Sectoral analysis shows that the restrictiveness is concentrated in vehicles, machinery, and electrical equipment.
That is from Michael E. Waugh.
Fear of larger wars in East Africa
This is one of my major worries for 2026 and beyond. The ethnic and tribal conflict in Ethiopia is not finished, and it killed 700,000 people not long ago. Ethiopia still covets sea access and Eritrea, which at times in the past belong to Ethiopia anyway. Israel has recognized Somaliland, with a variety of other countries, including the United States, likely to follow. For Somalia, that is akin to an act of war because it dismembers what they perceive as their country. Somalia and Ethiopia still have troubles. Ethiopia and Egypt have a major dispute over water rights, a possible casus belli.
The United States, and thus other countries too, might recognize South Yemen, in an attempt to better control Gulf access. This is not nominally Africa but it is a very real African issue as well.
Saudi and UAE are no longer close in a manner that enable them to collectively bring order to the area. More generally, political property rights are weak in the region, many borders are contested, and there is no generally acknowledged legitimate referee. UAE is seeking to play a larger role, perhaps with a good deal of hubris. Trump is Trump.
The battles in the Sudans may be spiraling into a larger regional conflict. There is also Rwanda and the Congo region.
So I am worried.
Is there a British productivity comeback?
Let us hope:
Britain is seeing early signs of a long-awaited turnaround of its productivity woes, according to an alternative measure that suggests output per hour worked has risen at a pace not seen since before the financial crisis.
The Resolution Foundation said a “blistering” productivity surge has been masked by problems with official statistics and pointed to encouraging indications of a clearout of “zombie” firms that contribute little to the economy.
Productivity growth, when measured using the Office for National Statistics’ troubled Labour Force Survey, was just 1.1% in the year through the third quarter of 2025. But the figures look far better when based on employee payrolls data that are more trusted by economists, the think tank said.
“Productivity was essentially flat between the pre-pandemic peak of Q4 2019 and post-pandemic trough of Q1 2024, but it has grown by a blistering 3.4% in the six quarters after that, a rate not seen since before the financial crisis,” the Resolution Foundation said in a report published Monday. Those gains are more than the previous seven years combined, it added.
Here is more from Bloomberg. I will update you on this as I learn more.
Greenland fact of the day
Greenland held a referendum on 23 February 1982 and voted to leave the European Communities / European Economic Community (EEC) (about 52–53% for leaving).
GPT link. They left in 1985.
I write this not to justify current American policy, which I consider a major mistake with extremely poor execution. Rather the point is that we are pushing the Greenlanders into the arms of the Danes, when over some longer haul it could be very different.
The FT offers many more interesting facts about Greenland, including its growing dependence on Asian foreign labor.
Podcast with Salvador Duarte
Salvador is 17, and is an EV winner from Portugal. Here is the transcript. Here is the list of discussed topics:
0:00 – We’re discovering talent quicker than ever 5:14 – Being in San Francisco is more important than ever 8:01 – There is such a thing like a winning organization 11:43 – Talent and conformity on startup and big businesses 19:17 – Giving money to poor people vs talented people 22:18 – EA is fragmenting 25:44 – Longtermism and existential risks 33:24 – Religious conformity is weaker than secular conformity 36:38 – GMU Econ professors religious beliefs 39:34 – The west would be better off with more religion 43:05 – What makes you a philosopher 45:25 – CEOs are becoming more generalists 49:06 – Traveling and eating 53:25 – Technology drives the growth of government? 56:08 – Blogging and writing 58:18 – Takes on @Aella_Girl, @slatestarcodex, @Noahpinion, @mattyglesias, , @tszzl, @razibkhan, @RichardHanania, @SamoBurja, @TheZvi and more 1:02:51 – The future of Portugal 1:06:27 – New aesthetics program with @patrickc.
Self-recommending, here is Salvador’s podcast and Substack more generally.
Those new (old) service sector jobs, chimney sweep edition
Now, many sweeps, including those in the Firkins family business, say the trade has been experiencing an improbable resurgence.
According to the National Association of Chimney Sweeps, demand has been bolstered by high energy prices, the popularity of wood-burning stoves and an international climate that has prompted warnings that electricity supplies could be vulnerable to attack by hostile states like Russia.
“People are thinking, ‘Let’s have a backup, let’s have a fire, let’s have a stove in case the electricity goes off,’” said Martin Glynn, the president of the chimney sweeps association, whose membership has risen to about 750 today, from about 590 in 2021. “If you have the ability to burn logs or smokeless fuel, you can keep cooking and have some heating. There is a big increase in demand and people are reopening their fireplaces.”
On a recent day, he said, three people had booked training courses. The association’s membership now includes 40 female sweeps. “It’s alive and kicking,” he said of the group, adding: “We don’t send little boys up chimneys any more, instead it’s CCTV and smoke testing equipment. It’s almost like being a chimney technician.”
Here is more from the NYT, via Mike Rosenwald.
China’s supply chain problems
They exist in manufacturing too, and perhaps this should help you feel a little better about American problems:
A January 2024 report on China’s wind power sector by researchers at Tsinghua University found that it remained heavily dependent on imports for crucial parts — including 60 per cent of the bearings that support their rotors, 70 per cent of the transistor modules used to convert power into grid-compliant electric current, and 100 per cent of logic modules used to control turbines in real time…
Consider lithium, cobalt, and manganese, three minerals used heavily in electric car btteries. The Chinese shares of global refining for these materials is overwhelming…But far smaller amounts of the raw materials come from mines in China – just 22 per cent, 3 percent and 4 per cent, respectively.
That is from Simon Mundy at the FT.
Thomas Sargent is a wise man
The protests began on December 28, initially led by traders and business owners who took to the streets against the rapidly weakening economy, soaring inflation, and the sharp fall in the rial’s value. The currency’s decline has been dramatic: against the Indian rupee, the rial is now valued at just 0.000091 paise, while against the US dollar it has fallen to around 0.0000010 cents.
Most strikingly, the rial’s value against the euro has dropped to zero, meaning it is no longer accepted or exchangeable in any of the 27 European Union countries.
Five Key Drivers Behind the Rial’s Freefall
- US and International Sanctions: Restricting access to dollars from exports, especially oil, has intensified pressure on the rial.
- Hyperinflation: Consumer prices rose by 42.5% in December 2025, forcing citizens to seek foreign currencies, gold, or essentials instead of holding cash.
- Weak Economic Growth: Iran’s GDP contracted by 1.7% in 2025, with further shrinkage projected in 2026, limiting government revenue and fiscal stability.
- Policy Changes: Recent reforms requiring importers to purchase foreign currency at open-market rates increased demand for dollars overnight.
- Political Unrest: Ongoing protests against clerical leadership and economic mismanagement have added a “risk premium,” accelerating currency depreciation.
Here is the full story. And that was before what appears to be, as I am writing this post earlier in the evening, the air attack on Iran [now called off, for the time being at least].
Markets in everything?
BREAKING: Secretary of State, Marco Rubio, overseeing Greenland acquisition — $500-$700 billion offer being prepared.
Negative political externalities from migration to Britain?
Following up on my recent post, which suggested less skilled immigration into the UK has not been a disaster, the question has been raised about long-term negative political externalities. Will not migrants enter the country and make electoral outcomes worse? I would offer a few points in response:
1. If this is the argument, one needs to admit that immigration has gone well enough in the UK to date. This argument is about the future, not the past.
2. The UK has indeed had a variety of poor leaders as of late. It is very difficult to hold immigrants responsible for them, mostly it is the native white Brits who have been at fault. You might not like how UK Muslims have shaped some of the Middle Eastern statements of Labour, but that is hardly a relevant factor behind the slowdown of the British economy, or of British gridlock.
3. There is a very real risk that Reform will win the next election and then implement bad economics policies, above and beyond whatever you think of their approach to immigration. But if that is the real fear, it would be good to limit their popularity by talking up the positive side of immigration. I am not suggesting that any of us should tell anything less than the full truth, but obviously there are many positive aspects of migration that even professional economists can get wrong. Does immigration mean “higher home prices” or “capital gains for domestic homeowners”? Well, both, but you hear much more about the former than the latter (even Gemini got that one wrong). Let’s redress the balance, and lower the risk of future bad economic policy while we are at it.
4. Sometimes immigration weakens the demand for welfare state transfers, since the immigrants are viewed as outsiders. In Britain, that would currently be a positive at current margins. I recognize that is by no means the only political effect, but in any case do not assume that all of the political externalities are negative.
Above all else, it is difficult to paint immigrants as major villains for Britain’s troubles so far. Just read through the original analysis again. It has not been seriously countermanded, and do most of their problems are indeed the fault of the white people.
That all said, I would readily admit, and indeed stress, that a better set of migration policies could have put Britain in a much better position than it is today.
They are solving for the (electoral) equilibrium
Social Security also got quietly more generous during this period. Each year, the Social Security Administration compares the C.P.I.-W (the Consumer Price Index for Urban Wage Earners) for the third quarter to the third quarter of the previous year and, if needed, adjusts benefits upward to compensate for inflation. There happen to have been three years during Obama’s presidency — 2009, 2010, and 2015 — when the mathematically correct cost-of-living adjustment would have been negative. What actually happens in this case is that seniors get zero cost-of-living adjustment, which means that, in real terms, benefits ratcheted upward.
Then during the Biden administration, Congress ended up passing the Social Security Fairness Act, which increased Social Security benefits for a disproportionately affluent set of retirees with access to other pensions with very little fanfare. This happened via a hugely bipartisan vote, so even organizations that were critical of the idea when it was first proposed were mostly silent as it actually happened. Then during the 2024 presidential campaign, Donald Trump proposed “no tax on Social Security,” which is really just a way of making Social Security benefits mildly more generous for high-income seniors.
That is from Matt Yglesias. It would be amazing if we got away with all of this!
Chairman Powell’s Statement
Whether an independent Fed is desirable is beside the point. The core issue is lawfare: the strategic use of legal processes to intimidate, constrain, and punish institutional actors for political ends. Lawfare is the hallmark of a failing state because it erodes not just political independence, but the capacity for independent judgment.
What sort of people will work at the whim of another? The inevitable result is toadies and ideological loyalists heading complex institutions, rather than people chosen for their knowledge and experience.