Category: Current Affairs
Supply is elastic, installment #1637
With deadly precision, the Trump administration has launched dozens of attacks on small boats in the waters off South America, killing nearly 200 people in a campaign U.S. officials say is meant to curb the flow of illicit drugs to the United States.
But almost nine months into the operation, epidemiologists, addiction scientists and public health experts say cocaine, by far the top drug smuggled out of South America, is as easy to get in much of the United States as it was before the strikes began.
The findings — based on evaluations of street prices, lethal overdoses, purity of samples and drug seizures at U.S. borders — raise questions about the effectiveness of the largest U.S. military deployment in Latin America in decades.
Here is more from the NYT. And here is another report on supply elasticity, note that European airlines are still flying.
Why are Murders Down in Baltimore?
In 2015 I wrote Baltimore Arrests are Down and Crime is Way Up and, as I predicted, Baltimore tipped into an high crime equilibrium. After the Freddie Gray riots, arrests declined and crime shot up but crime stayed high even after arrests rebounded. In my view, the surge fed on itself: higher crime strained police resources, and that strain—in and of itself—reduced the probability of punishment, sustaining the high-crime equilibrium, as in my crime wave paper.
Yet, beginning around 2022 crime in Baltimore—most especially murders—began to fall.
In April, Baltimore had four homicides, the lowest total for any single month since at least 1970. So far this year, there were 38, compared with 51 in the same period last year. At the current rate, Baltimore would end 2026 with fewer than 100 homicides. There were 323 just four years ago.
How did we get from a city in which the question was how high can crime rise, to one where the question is how low can it go? The answer might be linked to the nationwide decline in murder, spurred by a restoration of policing as the excesses of the George Floyd years recede. But that raises the question of what cities across the country are doing right.
So what caused the decline? We can’t be entirely sure as national trends confound but Charles Fain Lehman has a good piece in the FP arguing plausibly that the answer boils down to carrots, sticks and the non-random nature of murder. Begin with the latter. A significant subset of murders are highly predictable. A gang member gets gunned down today. Next week, you can expect retaliation. Moreover, you know who is going to do the murder even more than you know who is going to be murdered. Namely, a close associate—a fellow gang or family member—will be the one to do the killing. Sometimes pre-Cog is not so hard.
So with this in mind, Baltimore, under a new mayor and tough on crime prosecutor, began to intervene in the murder cycle before it happened, i.e. a focused deterrence program based on Boston’s Operation Ceasefire.
The approach involves a detailed investigation of every shooting that happens in the city. Every week, the Baltimore Police Department and its partners review the week’s incidents….For every shooting, GVRS prescribes reaching out to known associates of the victim.
…At one recent coordination meeting, about 20 people gathered around the table of the conference room at Baltimore’s Doxa Ministries Church Without Walls. Under the direction of Reginald Williams from the Mayor’s Office of Neighborhood Safety and Engagement, they talked through two new “referrals” associated with the victim of a recent shooting. One had a long criminal history and was on house arrest. Another, barely an adult, was himself a victim a few years earlier.
Both men will have their doors knocked on by several of the meeting’s attendees. They will be offered services—job training, tattoo removal, relocation, whatever they need to get out of the “life.” But they will also get a clear message, delivered verbally and in the form of a letter from Mayor Scott: Baltimore is watching them—and will come after them.
Carrots, sticks, and a little Pre-Cog. Together they appear to be working.
Those new service sector economics jobs?
Russia has passed a law authorizing its central bank and other financial institutions to repel drone attacks with their own defense systems, as the country struggles to defend against Ukrainian strikes.
The law, passed by Russia’s lower house of parliament on Tuesday, will allow staff at Russia’s central bank to be armed and to operate the systems used to down unmanned aerial vehicle (UAV, or drone) attacks without the involvement of special forces.
Here is the full story.
*How to Win a Trade War: An Optimistic Guide to an Anxious Global Economy*
That is the new Soumaya Keynes book, out today. I was happy to have blurbed this book, and here is an essay, on export restrictions, based on the book.
Quarantine sentences to ponder, that was then this is now edition…
Trump administration officials, confronted by overlapping outbreaks of Ebola and the hantavirus, have taken a more aggressive approach to locking down potentially exposed people than in past outbreaks, surprising many public health experts…
Dr. Jay Bhattacharya, acting director of the Centers for Disease Control and Prevention, drew notice during the Covid-19 pandemic for suggesting that the coronavirus should be allowed to spread freely among healthy people, and for arguing that mandatory quarantines and lockdowns were harmful to society.
Last week, however, he issued quarantine orders that cited public health laws for two passengers who wanted to leave the Nebraska facility and isolate in their home states.
Here is the full NYT story. Via Maxwell G.
The AIs are “One of Us”
A general purpose AI model from OpenAI has produced a (dis)proof of an important conjecture. Tim Gowers writes:
AI has now solved a major open problem — one of the best known Erdos problems called the unit distance problem, one of Erdos’s favourite questions and one that many mathematicians had tried.
A number of prominent mathematicians comment. I enjoyed Thomas Bloom’s comments:
This was one of Erdős’ favourite problems – he first asked it in 1946 [14] and returned to it many times. (The site www.erdosproblems.com, on which it is Problem #90, currently lists 14 separate references, and there are no doubt more.) The influential collection of ‘Research Problems in Discrete Geometry’ by Brass, Moser, and Pach [8] describes it as ‘possibly the best known (and simplest to explain) problem in combinatorial geometry’. For an AI to produce a solution to a problem of this calibre is both surprising and impressive.
…On examining the construction, it becomes more clear how people had missed this before – it requires the confluence of several different unlikely events: that a good mathematician is
(1) spending significant time in thinking about the unit distance conjecture in the first place;
(2) seriously trying to disprove it, despite the oft-repeated belief of Erdős that it is true;
(3) believes that there is mileage in generalising the original construction to other number fields,
and so is willing to expend significant time in exploring such constructions; and
(4) sufficiently familiar with the relevant parts of class field theory to recognise that the appropriately phrased question about infinite towers of number fields with appropriate parameters can be solved using existing theory.The AI met all of these criteria, and its success here echoes previous achievements: it often produces the most surprising results by persevering down paths that a human may have dismissed as not worth their time to explore, combining superhuman levels of patience with familiarity with a vast array of technical machinery.
…perhaps some in the area will be a little disappointed with how little this tells us: it does not introduce any powerful new geometric tools, or hitherto unsuspected structural results, that a proof of the unit distance conjecture would likely have called for. Still, while perhaps not the proof of a conjecture that we had hoped for, no doubt this construction and the ideas involved will have a major impact in discrete geometry.
One aspect of this proof should not be overlooked: while the original proof produced by AI was completely valid, it was significantly improved by the human researchers at OpenAI and the many other mathematicians involved in the present paper. The human still plays a vital role in discussing, digesting, and improving this proof, and exploring its consequences.
The frontiers of knowledge are very spiky, and no doubt the coming months and years will see similar successes in many other areas of mathematics, where long-standing open problems are resolved by an AI revealing unexpected connections and pushing the existing technical machinery to its limit. AI is helping us to more fully explore the cathedral of mathematics we have build over the centuries; what other unseen wonders are waiting in the wings?
One way of putting this is that the mathematicians are now acknowledging that the AI’s are “one of us”. Gooble Gobble! Read the AIs chain of thought to understand why. I asked Claude how many people the world could understand the proof:
A rough tiered estimate, treating “understand” as “could read the 42-page note and follow the argument without needing to learn new machinery from scratch”:
Tier 1 — could referee it cold (real working knowledge of class field towers + the Ellenberg–Venkatesh circle): roughly 150–400 people worldwide. This is essentially the active algebraic number theory community working near arithmetic statistics, plus a handful of arithmetic-geometry-adjacent combinatorialists. The author list itself is a decent proxy for the upper crust of this group.
Tier 2 — could understand it with a week or two of focused effort and some Wikipedia/textbook chasing (strong number theorists or combinatorialists outside the immediate subfield, plus sharp grad students past quals at top programs): roughly 2,000–5,000. Think most tenure-track number theorists, the top tier of extremal combinatorics, and arithmetic geometers generally.
Tier 3 — could grasp the structure of the argument from a Quanta-style exposition without verifying the steps: 50,000–200,000+, i.e., most working mathematicians and a chunk of physicists/CS theorists. This is not what you asked, but it’s where most of the public “understanding” will sit.
Repugnant Economics
I spoke on a panel at AEI with Nobelist Al Roth about his new book, Moral Economics, which covers “repugnant markets,” from prostitution to surrogacy to kidney exchange. A fun book!
My case study was acting. Acting was considered repugnant for over 2,000 years. In Rome, actors could not vote, hold office, or be trusted to give an oath in legal proceedings. So why don’t we find acting repugnant today?
One lesson: weighing costs and benefits is not enough. Roth discusses empirical research showing that legalizing prostitution cut STDs and sexual assaults—against prostitutes and others. But evidence alone won’t shift a repugnance norm. You also have to reframe the activity. Acting, for example was reframed from body rental to a skill requiring intelligence, training and ability. So I went out of my way to say that I am a fan of Aella—though not her only fan—and that I see no reason why escorting should not be considered a skill, requiring intelligence, training, and ability. I can think of few better ways of raising social welfare than making sex 10% better!
I also spoke on human challenge trials. Roth and I agree: challenge trials could have sped up COVID vaccines and saved tens of thousands of lives. We should be angry this didn’t happen. Why didn’t it? Even though most people think human challenge trials are a good idea, there was a repugnance bottleneck because the minority who did find human challenge trials repugnant were in charge. I discuss how to change this.
Al leads the discussion. My comments start at 25:15.
“Wokeness has peaked. What followed is worse.”
That is the topic of my latest column for The Free Press. Excerpt:
It is important to distinguish between the positive side of wokeism and the unreasonable side. The positive side supported gay rights and discouraged racism in the public sphere. The unreasonable side brought us cancel culture, stifled discussion, insisted on very particular views of race and gender identity, boosted DEI and other race-discriminatory policies, and generally made America a more intolerant place. It was most of all about who had the right to steer the agenda of public discourse, and who had the right to push out dissenters.
The unreasonable side, since it was about power and control, had negative vibes built into its core. Fortunately, American society pushed back against many of the most objectionable manifestations of those negative vibes, but did we get rid of the negative vibes themselves? I do not think so. The American people still seem pretty low in trust, unhappy with America’s position in the world, glum about the economy and cost of living, and increasingly skeptical of both AI and billionaires. That is all happening at a time when the American economic situation, while mixed, is by no means as terrible as it was in, say, 2009. Happiness and mental health seem to be lagging behind the country’s actual achievements.
So what has been happening? The forces behind wokeism no longer command so much public attention and respect when they argue about terms and pronouns. Instead, left-adjacent movements have arisen with a contrasting emphasis on action, and often action of a terrible sort. California is considering, for instance, an unworkable tax on billionaires in the state, one that even most left-leaning Democratic politicians do not support. It might nevertheless pass through via referendum…
What’s more, it is possible we are entering an era with a new culture of assassinations. There have been assassinations of Charlie Kirk, of healthcare CEO Brian Thompson, and several attempts on the life of President Trump. It can be debated how many of these killers had direct connections to the political left, but it is hard to avoid the conclusion that left-wing rhetoric about democracy destruction helped make such actions conceivable.
The social energies of the American left have moved away from the realm of speech and into plans for concrete action, whether in politics, through attempted wealth confiscations, or through organizing violence. In retrospect, wokeism, for all its problems, was a relatively harmless way of distracting activists and keeping them Negative busy with wars over words—a less-bad allocation of social energies than what we are now seeing. So while I would not say I long for the return of high wokeism, I recognize it has been replaced by a left-adjacent movement that is worse.
Worth a ponder, do read the whole thing. I should note I do not let the right off the hook either, though the column is mainly about what has succeeded Wokeism. Negative emotional contagion has affected both the left and right wings today. Here is one simple case in point.
Dwarkesh in the Datacenter
Dwarkesh tours one of Jane Street’s datacenters. It’s extraordinary how much compute goes into finance. (I once predicted that the finance AIs would be the first to become conscious, since they have the most compute.) More generally, however, this is a peek inside the remarkable economics, technology and physics of a datacenter. Did you know the electrical signal in a copper wire can travel faster than light in fiber…and that matters! Amazing.
Hayek in Jacobin
Here’s something I never expected to write: Jacobin, the magazine of the DSA-aligned left, has a good article on central planning. In an interview, Vivek Chibber lays out essentially the Mises–Hayek–Kornai critique of central planning. Information problems, incentive problems and the consequent failures are laid bare. Moreover, Chibber refuses to lay the blame at the feet of Stalin, poverty, or the Russians. Nor does he wave hopefully at supercomputers and AI, as is fashionable today on the planning-curious left:
The dilemma is this. There is a problem of information. Supercomputers will in fact help process information better. But if the information coming in is junk, and if that junk is built into the system because of the incentives that operators have in workplaces to lie, you will not have a planning system that can be put on its feet through the advent of computers or artificial intelligence or anything like that. I don’t see any reason to think that that strategic misalignment of incentives is simply there because of Russian backwardness or poverty.
Even the pedestrian is shocking coming from Jacobin:
Normally in capitalism, what do managers do? They want to make profits. The way to make a profit is by trying to sell, at the lowest price possible, the best-quality good that you can.
A vivid conclusion:
Melissa Naschek: What do you think leftists should learn from the failure of fully planned economies?
Vivek Chibber: What they should learn is that the burden of proof is on us, on the Left, if we want to continue with this slogan of replacing the market with the plan. The burden of proof is on us to show that it can work. You might say that along with this ought to come a kind of humility about facts and about the world.…it would be criminally negligent to ignore the experience of decades upon decades of planning and say to yourself, “Well, that wasn’t what my vision of socialism is, so I’m going to ignore it.” Because if you do that, I can guarantee 100 percent you will end up repeating many of the mistakes and falling into the same dilemmas that the planners did.
I could offer critiques. Stalin was not an impediment to central planning but a consequence of it. And to warn that ignoring the experience of central planning risks repeating “the same dilemmas that the planners did” is a bloodless way to describe dictatorship, famine, and mass murder. But that would be churlish. Let me end instead by saying that I agree with this:
If we’re actually serious about changing the world, people on the Left … should be the most remorseless and the most merciless when it comes to facts.
Replace “people on the Left” with “we” and the line is exactly right.
How Much Has Shale Gas Saved U.S. Consumers?
Every US president since Nixon has called for freeing the US from ‘dependence on foreign oil’ (within ten years!). Every president has failed. Fracking, however, has delivered the goods. Fracking has reduced the price of energy, reduced net emissions of greenhouse gases and turned the US into an energy exporter.
In How Much Has Shale Gas Saved U.S. Consumers? Lucas Davis compare LNG prices in the US ($5.3 Mcf), Europe ($14.4 Mcf) and Japan ($16.1 Mcf) to offer some plausible back of the envelope calculations:
Advances in hydraulic fracturing and horizontal drilling caused U.S. natural gas production to increase significantly, and the U.S. went from being a net importer of natural gas to being the world’s largest exporter. This paper calculates how much shale gas has saved U.S. natural gas consumers. Using price differences between the United States, Europe and Japan, we calculate that U.S. natural gas consumers have saved $4.5-$5.3 trillion between 2007 and 2025, equivalent to $237-$276 billion annually. Access to low-price U.S. natural gas has been particularly valuable during major supply shocks such as the war in Ukraine, and the benefits of shale gas have been experienced broadly across sectors and states.
Why are stock prices still so high?
That is the topic of my latest Free Press column, here is one excerpt, with the general theme that plenty is going well in the global economy:
A second important fact is that American presidents, whether Democrat or Republican, usually have very little influence on the economy. That is a hard truth for people to hear, since partisan sentiments often run strong, especially when it comes to President Trump. Yet the research literature is clear that most business cycles are not caused by presidents.
As for the current cycle, the core reality is that our economy continues to hum along. Yes, gas prices above $4 a gallon cause dismayed news stories and consumer worry. But energy prices have less influence on the overall economic picture than they once did. The chances of a recession have been falling, and a recent jobs report showed strong progress in hiring.
Of course the Trump administration will take credit for such developments, but mostly they are due to underlying structural factors.
And this:
During the current war, many parts of the global economy have shown more resilience and fortitude than might have been expected. Stocks in South Korea at first plummeted 20 percent, due largely to its dependence on Middle Eastern oil. Today, the Korean stock market, pushed along by the chip-making achievement of Samsung and memory maker SK Hynix, is reaching new highs.
…In previous times, sharp oil price hikes often brought catastrophe to the economies of Latin America. These days Latin American government bonds have held up well and are even considered a safe haven.
Recommended.
The UAP report so far
I will stick with my earlier Free Press predictions:
The fact remains that, if you talk with insiders, they will confirm that the federal government faces some big mysteries. It seems that we have data on what appear to be craft that move very fast, have no visible means of propulsion, and can accelerate in a surprising manner. Radar, infrared, and other forms of data are cited to varying degrees, plus there are eyewitness pilot reports, broadly consistent with what our instruments are telling us.
And this:
Assuming a reasonable chunk of the data are declassified, I think we will simply see more of the same kind of material we’ve seen in the past: more data on entities that appear to move very quickly and in mysterious ways, but with no real explanations. We will see, as I’ve argued before, that the government itself does not know what is going on, and has been afraid to admit that. That may be the real “conspiracy” and why the veil of secrecy has been relatively difficult to pierce.
As of yesterday, there are plenty of additional videos of what seem to be glowing orbs moving fast and in unpredictable ways. Or try this one. Here is another weird one. Or try this. And another one, near military craft. And what is this?
One thing we can conclude is that the debunkers, who have been suggesting this is all camera tricks, parallax issues, or people not understanding how videos work, are proven wrong in general, even though they are right about some particular cases. On that point we can move on, as I have been arguing for some while. Mick West is not your proper guide here.
Nonetheless we still do not know what it all means, and I do not see proof of anything in particular.
I also will stress my earlier point that we are not going to see alien bodies or alien technologies, or anything meaningful connected to Roswell. That is sheer fantasy, or sometimes locos.
340 million hits in the first twelve hours? More people will be believing in aliens in any case, I suspect. Or will it be demons?
It is fashionable in the comments sections of blogs to call this topic a waste of time, but the serious people in the military and national security — most of whom do not cite alien presence — do not see it that way.
And they will be releasing more materials. These materials are being released because some subsection of “the Deep State” wants to know what is going on. As do I.
Public Choice Outreach!
Just a few spots left! Lots of great speakers including Tyler, myself, Bryan Caplan, Robin Hanson, Jon Klick, Shruti Rajagopalan and more.
Please apply and encourage your students to apply.
Rose Farts and the Invisible Hand
In Modern Principles, Tyler and I show the invisible hand by telling the story of how the increase in oil prices in the 1970s encouraged millions of adjustments in how goods were produced and allocated, everything from an increased use of brick for driveways to a movement of the flower market from the US, which relied on heating greenhouses, to warmer climes like Columbia and Kenya. See the I, Rose video!
The FT has an amusing update:
“When my sheep break wind, it smells of roses,” he said, recounting one of the more bizarre and far-flung consequences of the decision by US President Donald Trump and Israel’s Prime Minister Benjamin Netanyahu to bomb Iran in February.
Since Tehran hit back by firing drones and missiles at US allies in the Gulf — grounding cargo flights and closing off the Strait of Hormuz through which booming east African trade with the region used to flow — Mahihu has been forced to jettison millions of rose stems.
