Category: Current Affairs
My 2018 Politico piece on whether we are descending into fascism
In 2018 I published an article in Politico, arguing that fascism would not come to America. In part that is because of our very long democratic traditions (much longer than Weimar!), and in part because American bureaucracy has become unmanageable, thus limiting the power of the executive. DOGE in particular has been a quite vivid representation of the latter point, as I made it in 2018 — “The net result is they simply can’t control enough of the modern state to steer it in a fascist direction.”
A few people have asked me to revisit that prediction, and frankly I think it is looking great. (I do not doubt, however, that the Trump administration represents a major increase in blatant corruption, and a deterioration of norms of governance, most of all in the areas of public health and science but not only. I think of America as evolving back to some of its 19th century norms, and often bad ones, not fascism.)
Noah Smith wrote recently:
Trump is cosplaying as a dictator. But so far he’s backed down on: * tariffs * ICE sweeps * Abrego Garcia * Greenland/Canada/Panama * Ukraine aid * DOGE He does care about public opinion, a lot.
Here is Noah’s longer essay.
Here is a recent NYT headline: “Trump Loses Another Battle in His War Against Elite Law Firms.” The judiciary has stood up to Trump firmly, and he has backed down. The Army parade, by the way, was mostly pathetic and hardly served as a call to fascist arms. The Kennedy Center is not the new Haus der Kunst.
It was some while back that Trump pulled the nomination of Stefanik to be UN ambassador, on the grounds that the Republican margin in the House was extremely thin. All I can say is that Hitler would have done it differently.
Updating our views of nuclear deterrence, a short essay by o3 pro
I asked o3 pro how very recent events should update our perspectives on Schelling’s work on nuclear deterrence. I asked for roughly 800 words, here is one excerpt from what I received:
…Deterrence models that ignore domestic legitimacy under‑predict risk‑taking.
6. The United States is both referee and participant
American destroyers shooting down Iranian missiles create a blended deterrence model: extended defense. That blurs the line between the traditional “nuclear umbrella” and kinetic participation. It also complicates escalation ladders; Tehran now weighs the prospect of an inadvertent clash with the U.S. Fifth Fleet every time it loads a Shahab‑3. The war thus updates Schelling’s idea of “commitment” for the 21st‑century alliance network: digital sensors, shared early‑warning data, and distributed interceptors knit allies into a single strategic organism, reducing the freedom of any one capital to de‑escalate unilaterally.
7. Lessons for non‑combatant nuclear states
New Delhi and Islamabad will notice that an opaque Israeli arsenal backed by high‑end defenses delivered more bargaining power than Iran’s half‑finished program. Pyongyang may conclude the opposite: only a tested, miniaturized warhead guarantees respect. Meanwhile European leaders should ponder how much of their own deterrent posture rests on aging U.S. missiles whose effectiveness presumes no adversary fielding Israel‑grade intercept layers. The Israeli‑Iranian conflict is therefore less a regional exception than a harbinger.
Here is the full “column.”
Which countries won’t exist in the 22nd century?
Or sooner, that is the topic of my latest essay for The Free Press. Excerpt:
The most radical redefinition of the nation-state may be coming from Haiti, where preexisting forms of government appear to have collapsed altogether. Haiti has been a troubled place for a long time, but when I used to visit in the 1990s you could come and go intact—at least if you exercised commonsense precautions.
But since 2023, there have been no elected officials of any kind present in Haiti. That is highly unusual for what was supposed to be a democracy. Circa mid-2025, criminal gangs took control of most of Port-au-Prince, the capital and most populous city of the country. Murder rates are skyrocketing, and if somehow I were foolish enough to show my face in the country (by the way, the main airport is not usually open) it is likely I would be kidnapped almost immediately.
The remaining fragments of the government have taken to carrying out drone attacks on the criminal gangs, but without making much if any progress in reestablishing their rule. Mainly it is the warlords who are left, and who also run the country.
Various U.S. interventions, most notably under President Clinton in the 1990s, and UN-backed troop deployments have failed to prevent Haiti from falling to pieces. You can say the world has not tried hard enough, but you cannot say the world has not tried. There is still a Kenyan-led, UN-affiliated force in Haiti, but it does not appear to exert any significant influence.
One possibility is that a dominant gang emerges and becomes the new government, albeit a highly oppressive one. Yet it is far from obvious that consolidation is in the works, as in many situations we observe multiple, warring drug gangs as a persistent outcome. Most likely, Haiti will have ceased to be a sustainable nation-state with an identifiable government. It would better be described as a state of Hobbesian anarchy.
Worth a ponder.
One or two game theoretic observations
So far the campaign is a major “win” for (non-LLM) AI, though that is not yet a story. There is a reason why Palantir was priced at 300x earnings.
If you are one of those Iranian leaders, or nuclear scientists, your calculus has to be that you can never step outside again, at least not anytime soon. I believe that situation is unprecedented in the history of wartime? It remains to be seen how much that will shape the logic of deterrence and in turn outcomes, but I will be pondering this and observing.
Japan facts of the day
Japan must stop being overly optimistic about how quickly its population is going to shrink, economists have warned, as births plunge at a pace far ahead of core estimates.
Japan this month said there were a total of 686,000 Japanese births in 2024, falling below 700,000 for the first time since records began in the 19th century and defying years of policy efforts to halt population decline.
The total represented the ninth straight year of decline and pushed the country’s total fertility rate — the average number of children born per woman over her lifetime — to a record low of 1.15…
The median forecast produced by the National Institute of Population and Social Security Research (IPSS) in 2023 did not foresee the number of annual births — which does not include children born to non-Japanese people — dropping into the 680,000 range until 2039.
Here is more from Leo Lewis at the FT.
Adam Tooze on European military spending
Now, you might think that the US figure is inflated by the notorious bloat within the American military-industrial complex. I would be the last person who would wish to minimize that. But the evidence suggests that the bias may be the other way around. American defense dollars likely go further than European euros.
Look for instance at the price of modern, third-generation battle tanks and the cost of self-propelled howitzers, which have been key to the fighting in Ukraine. German prices are far higher than their American counterparts.
And, as work by Juan Mejino-López and Guntram B. Wolff at the Bruegel policy think tank has shown, these higher costs have to do with smaller procurement runs and smaller procurement runs are, in turn, tied to the fragmentation of Europe’s militaries and their strong preference for national procurement.
Right-now there is often lamentation about the tendency of European militaries to import key weapons systems from the US. And there is, of course, plenty of geopolitical and political maneuvering involved, for instance, in Berlin’s initiative to build an air defense system heavily reliant American and Israeli missiles. As the data show, Germany does have a strong preference for imports from the US rather than its European neighbors.
But, on average, across the entire defense budget, the besetting sin of European militaries is not that they rely too heavily on foreign weapons, but that they import not enough. They are too self-sufficient. The problem is not that Germany buys too many weapons from the US, but that it buys too many in Germany.
National fragmentation creates the balkanized defense market, the inefficient proliferation of major weapons systems and in terms of global industrial competition, the small size of European defense contractors.
Here is the full Substack, very good throughout. Via Felipe.
Deport Dishwashers or Solve All Murders?
I understand being concerned about illegal immigration. I definitely understand being concerned about murder, rape, and robbery. What I don’t understand is being more concerned about the former than the latter.
Yet that’s exactly how the federal government allocates resources. The federal government spends far more on immigration enforcement than on preventing violent crime, terrorism, tax fraud or indeed all of these combined.
Moreover, if the BBB bill is passed the ratio will become even more extreme. (sere also here):
Don’t make the mistake of thinking that immigration enforcement is about going after murderers, rapists and robbers. It isn’t. Indeed, it’s the opposite. ICE’s “Operation At Large” for example has moved thousands of law enforcement personnel at Homeland Security, the FBI, DEA, and the U.S. Marshals away from investigating violent crime and towards immigration enforcement.
I’m not arguing against border enforcement or deporting illegal immigrants but rational people understand tradeoffs. Do we really want to spend billions to deport dishwashers from Oaxaca while rapes in Ohio committed by US citizens go under-investigated?
Almost half of the murders in the United States go unsolved (42.5% in 2023). So how about devoting some of the $167 billion extra in the BBB bill to say expand the COPS program and hire more police, deter more crime and to use Conor Friedersdorf’s slogan, solve all murders. Back of the envelope calculations suggest that $20 billion annually could fund roughly 150 k additional officers, a ~22 % increase, deterring some ~2 400 murders, ~90 k violent crimes, and ~260 k property crimes each year. Seems like a better deal.
The wisdom of Ezra Klein
What both forms of populism share is a tendency to treat virtue as a fixed property of groups and policy as a way of redistributing power from the disfavored to the favored. When I said we needed “a liberalism that builds,” David Dayen, the editor of The American Prospect, responded that “we need a liberalism that builds power” and that the way to get it is for the government “actively supporting the very groups that have been left out of past economic transitions, building the necessary coalition for long-term transformation.”
Every policy, in this telling, has two goals. One is the goal of the policy or the project; perhaps you’re trying to decarbonize the economy or build affordable housing or increase competition in the market for hearing aids. But the other is the redistribution of power among groups: Does this policy leave unions stronger or weaker? Environmental justice groups? Corporations?
Under the populist theory of power, bad policy can be — and often is — justified as good politics. In California, the California Environmental Quality Act is defended by unions that use it to “greenmail” all manner of projects. CEQA is meant to protect the environment, but the threat of unending litigation can be used to win non-environmental concessions on virtually any building project in California.
Here is the full NYT piece, interesting throughout, for instance:
My view of power is more classically liberal. In his book “Liberalism: The Life of an Idea,” Edmund Fawcett describes it neatly: “Human power was implacable. It could never be relied on to behave well. Whether political, economic or social, superior power of some people over others tended inevitably to arbitrariness and domination unless resisted and checked.”
Worth a ponder.
Supersonics Takeoff!
In Lift the Ban on Supersonics I wrote:
Civilian supersonic aircraft have been banned in the United States for over 50 years! In case that wasn’t clear, we didn’t ban noisy aircraft we banned supersonic aircraft. Thus, even quiet supersonic aircraft are banned today. This was a serious mistake. Aside from the fact that the noise was exaggerated, technological development is endogenous.
If you ban supersonic aircraft, the money, experience and learning by doing needed to develop quieter supersonic aircraft won’t exist. A ban will make technological developments in the industry much slower and dependent upon exogeneous progress in other industries.
When we ban a new technology we have to think not just about the costs and benefits of a ban today but about the costs and benefits on the entire glide path of the technology
In short, we must build to build better. We stopped building and so it has taken more than 50 years to get better. Not learning, by not doing.
… I’d like to see the new administration move forthwith to lift the ban on supersonic aircraft. We have been moving too slow.
Thus, I am pleased to note that President Trump has issued an executive order to lift the ban on supersonics!
The United States stands at the threshold of a bold new chapter in aerospace innovation. For more than 50 years, outdated and overly restrictive regulations have grounded the promise of supersonic flight over land, stifling American ingenuity, weakening our global competitiveness, and ceding leadership to foreign adversaries. Advances in aerospace engineering, materials science, and noise reduction now make supersonic flight not just possible, but safe, sustainable, and commercially viable. This order begins a historic national effort to reestablish the United States as the undisputed leader in high-speed aviation. By updating obsolete standards and embracing the technologies of today and tomorrow, we will empower our engineers, entrepreneurs, and visionaries to deliver the next generation of air travel, which will be faster, quieter, safer, and more efficient than ever before.
…The Administrator of the Federal Aviation Administration (FAA) shall take the necessary steps, including through rulemaking, to repeal the prohibition on overland supersonic flight in 14 CFR 91.817 within 180 days of the date of this order and establish an interim noise-based certification standard, making any modifications to 14 CFR 91.818 as necessary, as consistent with applicable law. The Administrator of the FAA shall also take immediate steps to repeal 14 CFR 91.819 and 91.821, which will remove additional regulatory barriers that hinder the advancement of supersonic aviation technology in the United States.
Congratulations to Eli Dourado who has been pushing this issue for more than a decade.
The wisdom of Conor Sen
30-year yields down 25bps since the House passed One Big Beautiful Bill.
It’s weird to me how this isn’t the consensus view. And OBBB + tariffs is tighter net fiscal policy than we would’ve gotten with Kamala plus a GOP Senate.
Both from X, here and here. The “relative to the counterfactual” is a critical point here, still this perspective is somewhat neglected, especially now with the whole big popcorn scramble thing and the feud.
My Conversation with the excellent John Arnold
Here is the audio, video, and transcript. Here is part of the episode summary:
Tyler and John discuss his shift from trading to philanthropy and more, including the specific traits that separate great traders from good ones, the tradeoffs of following an “inch wide, mile deep” trading philosophy, why he attended Vanderbilt, the talent culture at Enron, the growth in solar, the problem with Mexico’s energy system, where Canada’s energy exports will go, the hurdles to next-gen nuclear, how to fix America’s tripartite energy grid, how we’ll power new data centers, what’s best about living in Houston, his approach to collecting art, why trading’s easier than philanthropy, how he’d fix tax the US tax code and primary system, and what Arnold Ventures is focusing on next.
Excerpt:
COWEN: Say there’s a major volcanic event, and there’s a lot of ash in the sky for two or three years. Solar needs a backup. In the meantime, before the volcanic event happens — and of course, that’s quite rare — how much do we need to be up and running with the backup energy infrastructure? What do we need for reserve capacity in case the solar goes down?
ARNOLD: Good question. It would be difficult. It’s doable today. I think as solar continues to grow in market share, both in the US and globally, it will have to be met with some type of battery, a significant battery resource. That’s part of the economics of solar now, that it’s not just sticking it right outside of Phoenix, but it is solar plus transmission or solar plus battery. The question of what happens in that type of event — it would be difficult. The existing energy infrastructure is still largely around.
COWEN: But it will dwindle over time, right?
ARNOLD: It will dwindle over time.
COWEN: Is there some market issue? Say the volcanic event is only once every 150 years, but sooner or later, one happens. In the meantime, you need economic incentives for the gas or the nuclear to be ready. Does our government just keep on paying for those for 149 years in a row until the catastrophe comes?
ARNOLD: It’s a great question, and I think this is why nuclear, and particularly next-gen nuclear, is considered the holy grail, right? You’re not constrained by location. You’re not constrained by, is the wind blowing, is the sun shining? And it’s a clean resource. The problem today is just economics. In order to develop the current generation of nuclear, it’s extraordinarily expensive. Next generation — either small modular fission or fusion — both have a number of technological as well as unclear economics in how they compete.
I do think this question of how do you do this transition in a manner that maintains affordability but continues to get cleaner and lower emissions over time is a complex one, and I think it’s one that the environmentalists probably oversold five years ago in saying that this was going to be an easy transition. It’s certainly not. Just the scale and scope of the energy system is enormous, as you’re pointing to in your question. The need for backup, the need for a diversity of fuels, and how they complement each other is real, and you can’t replace that just with the intermittent resources we have today, plus battery.
And:
COWEN: What’s your most optimistic scenario for the US energy future from an environmental point of view, something that could plausibly happen?
ARNOLD: I think next-gen nuclear, if we can overcome the technical hurdles, if we can overcome the economic hurdles.
COWEN: But isn’t NIMBYism the biggest hurdle? The others I could imagine overcoming pretty readily, but I live in Fairfax County, which builds a fair amount. People there just don’t want nuclear. It’s irrational, but I’m not sure they’ll change their minds. It could be called fusion; it’s still nuclear to them.
ARNOLD: Yes, I’ve been surprised. That was my prior five years ago. I’ve been surprised at the number of jurisdictions that are inviting these next-gen nuclear companies to come. Texas, for instance, just passed a bill creating new incentives for nuclear companies to come and build their first plants and pilot projects in Texas. You see jurisdictions that are choosing to take the economic growth associated with it and that have more of a building culture and say, “Come here.”
I think, as things get proven out, then the question is, will the Fairfax counties of the world see what’s going on and become more agreeable to having that? I think it’s very similar to self-driving cars.
There’re some jurisdictions that say, “Come here. We want you to come, test,” and this is what’s happening in Texas. These companies say, “We want you to come pilot your projects here.” And some jurisdictions are saying, “No, prove it out, and then we’ll talk.”
COWEN: My nightmare is that even Texas becomes NIMBY. You see this in Austin already. Houston, Dallas will become more like the rest of America over time, maybe even San Antonio someday, El Paso with more time.
Interesting throughout, recommended. We also talk about art and art collecting…
China markets in everything
But in the country’s large cities, spaces that offer the solution have begun to spring up: companies that allow people to pretend to work.
For a daily fee of between 30 and 50 yuan ($4-$7), these companies offer desks, Wi-Fi, coffee, lunch, and an atmosphere that mimics any work environment. According to a report in Beijing Youth Daily, although there are no contracts or bosses, some firms simulate them: fictitious tasks are assigned and supervisory rounds are even organized. For a fee, the theatricality can reach unimaginable levels, from pretending to be a manager with his own office to staging episodes of rebellion against a superior.
Zonghua is Cantonese and prefers not to give her real name. Tired of traveling and the pressures of the financial world, she resigned from her position in the spring of 2024, she tells this newspaper via a local social media platform. “I was looking for a more stable life,” she writes. But she doesn’t dare tell her family the truth. At first, she went to libraries, but for the past few months, she has been paying a monthly fee of 400 yuan ($55) for a comfortable space to spend the day; it’s much cheaper than spending hours in a cafe. Zonghua doesn’t know how much longer this situation will last, as, for now, she’s not having any “success” with her applications.
Here is the full story, not unrelated to UBI debates either. Via R.
Sentence of the Day
FT: Analysis by Torsten Sløk, chief economist at Apollo, suggested that US government credit default swap spreads — which reflect the cost of protecting a loan against default — are trading at levels similar to Greece and Italy.
Yikes!
They are solving for the (crypto) equilibrium
Twenty-five people, including six minors, were charged in Paris over a spate of kidnappings and attempted abductions in France’s cryptocurrency world, said the city’s public prosecutor office on Saturday, May 31.
“Eighteen people have been placed in pre-trial detention, three have requested a deferred hearing and four have been placed under judicial supervision,” the public prosecutor said, with the suspects between 16 and 23 years old.
Here is the full story.
Italy facts of the day
About 156,000 Italians left the country last year for Germany, Spain, the UK and elsewhere, a 36.5 per cent increase over the number who emigrated in 2023.
At just under 191,000, the total number of people who left Italy in 2024 — including 35,000 long-term foreign residents, mainly Romanians returning home — was at the highest level in a quarter of a century, according to Italy’s official statistics agency, Istat.
Italy’s population decline is among the most acute in Europe, after decades of plummeting birth rates. At present, about a quarter of Italy’s 59mn people are over the age of 65, while just 12 per cent of the population are children aged 14 and under. The working age population is forecast to drop by another 5mn people by 2040.
Here is the full FT story.