Category: Current Affairs

I think crypto performed well in the Monday pseudo-crash

by  Tyler Cowen in

Of course the crypto prices fell first, over the weekend.  I think Bitcoin fell by about 15 percent?

You can think of crypto as a hedge against illiquidity, rather than against inflation, or against the decline of America, or whatever.  There are not enough liquid assets!  So sometimes solvent economies go tails up, because debtors do not have enough liquidity to meet their obligations.

Putting another liquid asset in the mix, in this case Bitcoin, eases that liquidity constraint.  You can’t meet your margin call?  Just sell some Bitcoin!

Economies will become more resilient to liquidity squeezes, especially from surprise events, for instance the financial volatility in Japan.  And the crypto prices falling, when other asset prices fall, is a sign of this mechanism working, not of crypto failing.

Of course it is not entirely so simple.  In the longer run, the liquidity of crypto will encourage people to take out more debt.  Still, overall, an economy with more liquid assets should (usually) have superior risk-sharing properties.

I don’t see this aspect of crypto discussed very much.

My excellent Conversation with Paul Bloom

by  Tyler Cowen in

Here is the audio, video, and transcript.  Here is part of the episode summary:

Together Paul and Tyler explore whether psychologists understand day-to-day human behavior any better than normal folk, how babies can tell if you’re a jerk, at what age children have the capacity to believe in God, why the trend in religion is toward monotheism, the morality of getting paid to strangle cats, whether disgust should be built into LLMs, the possibilities of AI therapists, the best test for a theory of mind, why people overestimate Paul’s (and Tyler’s) intelligence, why flattery is undersupplied, why we should train flattery and tax empathy, Carl Jung, Big Five personality theory, Principles of Psychology by William James, the social psychology of the Hebrew Bible, his most successful unusual work habit, what he’ll work on next, and more.

And here is one excerpt:

COWEN: I have some questions about intelligence for you. If we think of large language models, should we let them feel disgust so that they avoid left-wing bias?

BLOOM: [laughs] Why would disgust make them avoid left-wing bias?

COWEN: Maybe we’re not sure it would, but there are various claims in the literature that for people on the right, disgust is a more fundamental emotion, and that a greater capacity to feel disgust encourages people in some ways to be more socially conservative. Debatable, but I don’t think it’s a crazy view. So, if you build LLMs, and you give them, say, a lot of empathy and not much or any disgust, you’re going to get left-leaning LLMs, which you might say, “Well, that was my goal.” But obviously, not everyone will accept that conclusion either.

BLOOM: I wouldn’t want woke LLMs. I think there’s a lot in extreme —

COWEN: You’ve got them, of course.

BLOOM: I’ve got them. I think Gemini is the one, if I wanted to go — the woke LLM of choice. Because I think the doctrine called wokeness leads to a lot of moral problems and makes the world worse in certain ways, but I wouldn’t mind left-wing LLMs.

In fact, I’m not a fan of disgust. You’re right that disgust is often associated with right-wing, but in the very worst instantiation of it. Disgust is what drives hatred towards gay people. It involves hatred of interracial marriage, the exclusion of immigrants, the exclusion of other races. If there’s one emotion I would take away from people, it would be disgust, at least disgust in the moral realm. They could keep their disgust towards rotten food and that sort of thing. That’s the one thing I wouldn’t put into LLMs. I’d rather put anger, pity, gratitude. Disgust is the one thing I’d keep away.

COWEN: So, you wouldn’t just cut back on it at the margin. You would just take disgust out of people if you could?

And:

COWEN: I think at the margin, I’ve moved against empathy more being a podcast host, that I’ll ask a question —

BLOOM: Wait. Why being a podcast host?

COWEN: Well, I’ll ask a question, and a lot of guests think it’s high status simply to signal empathy rather than giving a substantive answer. The signaling-empathy answers I find quite uninteresting, and I think a lot of my listeners do, too. Yet people will just keep on doing this, and I get frustrated. Then I think, “Well, Tyler, you should turn a bit more against empathy for this reason.” And I think that’s correct.

Paul cannot be blamed for doing that, however.  So substantive, interesting, and entertaining throughout.

Life in Belarus update (from my email, from anonymous)

by  Tyler Cowen in

Just an interesting update:

Chinese cars are rapidly replacing European & American cars in the city. An improvement in terms of comfort. Luxury cars still only European.

Housing prices in Minsk are reaching highs not seen since 2016. Government bodies that deal with the sales of properties are booked out 2 weeks. (Not common)

Subjectively, restaurants have improved immensely in the past few years with the influx of Chinese students and businessmen. Minsk has its first proper Korean restaurant,  and Chinese food has become as good as in China. Minskers have a new found taste of spicy food (so says friends in the food industry)

Everyone I know that lost their jobs from sanctions has found something new working for a locally (or CIS) focused company.

Any products that disappeared after sanctions was either replaced by local (or russian) products, or reappeared with a Chinese label.

From my perspective, regarding Chinese, the immigration center I go to every year has become very very crowded with Chinese. It went from maybe 10 people waiting, to over 100 – every day.

Oppositional people have left long ago, people who remain accept or support the Government. . .

There has to be some profound lessons to draw from this, but I’m not sure.

It’s hard to measure & quantify resilience? Sanctions are ineffective with such a global economy? China is in control of this century? Maybe it’s a good thing to produce things locally? GDP is taken too seriously in the public mind?

Have the vibes shifted back?

by  Tyler Cowen in

Noah writes:

I would love an update to this

@tylercowen

post, explaining why the vibes have seemingly shifted back!

I don’t think the vibes have shifted back at all, and here is my earlier post.  To cite one key point, MZ referred to Trump being “bad ass,” and it still has not created anything close to a scandal.  This new world is here to stay, and this kind of toleration is likely to be extended further.

Part of the ongoing shift in vibes is that now the Democrats are trying to win with a “brat” and “vibes only” strategy, and no real policy positions.  That is a sign that they too recognize the vibes have shifted.  So far Harris has been resisting most of the pressure from the Left.  And Walz’s Congressional voting record was to the right of 70% of the Democrats.  His recent big speech often felt like Frank Capra.  I also predict that his more extreme actions as Governor will not be emphasized, to say the least.

Noah has a very good post on the new vibes of the Democrats, and I agree with his major points.  Note that Cori Bush just became the second Squad member to be ousted in a Democratic primary.

It was never about who would win the election, as most economic theories predict this should be close to 50-50.  Rather, ideology has changed, voters are (mostly) fed up with Left positions, and of course they are fed up with a bunch of right-wing positions too (note that Vance is not popular and Trump is disavowing the 2025 agenda).

Once you realize that none of this is about “which party wins,” it is obvious that the vibe shift is continuing, not being reversed.

An economist as interim leader of Bangladesh

by  Tyler Cowen in

The president of Bangladesh on Tuesday appointed Muhammad Yunus, a pioneer in microfinance and a Nobel laureate, to oversee an interim government, accommodating demands by protesters and offering a reprieve for a country scarred by violence.

The plans for a new government were announced a day after Bangladesh’s authoritarian leader, Sheikh Hasina, resigned and fled the country amid a popular uprising.

Here is more from the NYT.

Operation Warp Speed for Cows

by  Alex Tabarrok in

The UK Health Security Agency has raised their pandemic threat level for H5N1 bird flu from a 3 to a 4 on a 6 point scale. 

My takeaway is that we have completely failed to stem the outbreak in cattle, there has been animal to human transmission which we are surely undercounting, but so far the virus has not mutated in a way to make it very adaptable to humans. 

The failure to stem the outbreak in cattle is concerning because it suggests we would not be able to stem a human outbreak. We can easily test, quarantine and cull cattle!

It is absolutely outrageous that dairy farmers are refusing to cooperate on testing:

To date dairy farmers have, in large measure, refused to cooperate with efforts to chart how deeply the virus has infiltrated U.S. herds, seeing the possible stigma of admitting they have H5N1-infected cows as a greater risk than the virus itself.

We should be testing at much higher rates and quarantining and culling. The dairy farmers should be and are being compensated but frankly the farmers should have no say in the matter of testing. Externalities! Preventing a pandemic is much cheaper both in resources and in restrictions on liberty than dealing with one.

And how about an Operation Warp Speed for a vaccine for cows? Vaccinate. Vacca! It’s right there in the name! If only we could come up with a clever acronym for an Operation Warp Speed for COWS.

Developing a vaccine for cows would also speed up a human vaccine if one were needed.

Here are some key points from the UK HSA:

There is ongoing transmission of influenza A(H5N1) in the US, primarily through dairy cattle but with multispecies involvement including poultry, wild birds, other mammals (cats, rodents, wild mammals) and humans (1, 2). There is high uncertainty regarding the trajectory of the outbreak and there is no apparent reduction in transmission in response to the biosecurity measures that have been introduced to date. There is ongoing debate about whether the current outbreak should be described as sustained transmission given that transmission is likely to be facilitated by animal farming activities (3). However, given that this is a permanent context, the majority of the group considered this outbreak as sustained transmission with the associated risks.

…There is evidence of zoonotic transmission (human cases acquired from animals). There is likely to be under-ascertainment of mild zoonotic cases.

..Overall, there is no evidence of change in HA which is suggestive of human adaptation through these acquired mutations. Although genomic surveillance data are likely to lag behind infections, the lack of evidence of viral adaptation to α2,6SA receptors after thousands of dairy cattle infected may suggest that transmission within cows does not strongly predispose to human receptor adaptation. Evidence of which sialic acid receptors are present in cows, which is needed to support this hypothesis, is still preliminary and requires confirmation.

Underreported news of the day

by  Tyler Cowen in

The attack affected online services of all major Russian banks, national payment systems, social networks and messengers, government resources, and dozens of other services…Carpet-Bombing Hack: #Ukraine’s Intelligence (#HUR) has completed one of the largest cyberattacks on Russia’s financial sector and government resources, Kyiv Post HUR sources reported.

Here is the link.

Venezuela under “Brutal Capitalism”

by  Alex Tabarrok in

Jeffrey Clemens points us to some bonkers editorializing in the NYTimes coverage of the likely stolen election in Venezuela. The piece starts out reasonably enough:

Venezuela’s authoritarian leader, Nicolás Maduro, was declared the winner of the country’s tumultuous presidential election early Monday, despite enormous momentum from an opposition movement that had been convinced this was the year it would oust Mr. Maduro’s socialist-inspired party.

The vote was riddled with irregularities, and citizens were angrily protesting the government’s actions at voting centers even as the results were announced.

The term “socialist-inspired party” is peculiar. The party in question is the United Socialist Party of Venezuela (Partido Socialista Unido de Venezuela) and it’s founding principles state, “The party is constituted as a socialist party, and affirms that a socialist society is the only alternative to overcome the capitalist system.” So, I would have gone with ‘Mr. Maduro’s socialist party’. No matter, that’s not the big blunder. Later the piece says:

If the election decision holds and Mr. Maduro remains in power, he will carry Chavismo, the country’s socialist-inspired movement, into its third decade in Venezuela. Founded by former President Hugo Chávez, Mr. Maduro’s mentor, the movement initially promised to lift millions out of poverty.

For a time it did. But in recent years, the socialist model has given way to brutal capitalism, economists say, with a small state-connected minority controlling much of the nation’s wealth.

Venezuela is now governed by “brutal capitalism” under Maduro’s United Socialist Party!??? The NYTimes has lost touch with reality. From the link we find that what they mean is that some price and wage controls were lifted, including allowing dollars to be used because the bolívar, was “made worthless by hyperinflation,” and remittances from the United States were legalized:

NYTimes: With the country’s economy derailed by years of mismanagement and corruption, then pushed to the brink of collapse by American sanctions, Mr. Maduro was forced to relax the economic restraints that once defined his socialist government and provided the foundation for his political legitimacy.

Lifting some controls does not make Venezuela a capitalist country. Moreover, the lifting of controls led to improvements:

…Seeing shelves stocked again has also helped ease tensions in the capital, where anger over the lack of basic necessities has, over the years, helped fuel mass protests.

…The transformation also brought some relief to the millions of Venezuelans who have family abroad and can now receive, and spend, their dollar remittances on imported food.

Of course, the improvements were not equally shared. If you want to call unequal improvements, “brutal capitalism”. Well, I don’t think that’s useful but if you do so be sure to note that “under Maduro’s administration, more than 20,000 people have been subject to extrajudicial killings and seven million Venezuelans have been forced to flee the country.” (Wikipedia.) That’s brutal socialism.

Lastly, I don’t expect, the NYTimes to keep up on the latest counter-factual estimation techniques so I won’t ding them too much, but it’s clear that the Chavismo regime never lifted millions out of poverty. At best, poverty fell during the good years at the rate one would have expected from looking at similar countries. It’s the later rise in poverty which is unprecedented, as the NYTimes previously acknowledged.

Britain fact of the day

by  Tyler Cowen in

But many of the phrases the English grew up with are fading away as younger generations plug into TikTok or other platforms where they learn to call each other “Karen” or “basic” like any other rando, instead of sticking with tried and tested indigenous slurs.

Nearly 60% of the Gen Z cohort haven’t heard the insult “lummox,” according to a study by research agency Perspectus Global. Less than half know what a “ninny” is, with only slightly more of them familiar with “prat” or “tosspot.”

What a bunch of plonkers.

There was a time when nearly everybody would sling about terms like “blighter” or “toe-rag,” and sometimes far ruder terms. That was when the British had more of a shared pop culture, often built around television comedies such as “Only Fools and Horses,” about a family of likable London con men. People would talk about them in the schoolyard or at work the next morning. Everyone knew what everyone else was talking about, even if it was a load of twaddle.

Here is more from James Hookway at the WSJ.  How can those ninnies not know what a ninny is?

Rent Control Reduces New Development: Bug or Feature?

by  Alex Tabarrok in

The minimum wage will tend to increase unemployment among low-skill workers, often minorities. To many people that’s an argument against the minimum wage. But to progressives at the opening of the 20th century that was an argument for the minimum wage–progressive’s demanded minimum wages to get women and racial minorities out of the work force.

Something similar may be happening with rent control. Rent control reduces new development. Bug or feature? California Republican Tony Strickland argues that reduced development is a feature. New state laws in California prevent cities from restricting development but if rent control was legal cities could be used it to do the same thing just by making it unprofitable to build.

Politico: Strickland said Weinstein’s rent control measure [allowing cities to use rent control] would block “the state’s ability to sue our city” because Huntington Beach could slap steep affordability requirements on new, multi-unit apartment projects that are now exempt from rent control. Such requirements, he argued, could stop development that would “destroy the fabric” of the town’s quaint “Surf City” vibe…. “It gives local governments ironclad protections from the state’s housing policy and therefore overreaching enforcement.”

“On paper, it would be legal to build new homes. But it would be illegal, largely speaking, to make money doing so,” said Louis Mirante…

Hat tip: Ben Krauss at Slow Boring.