Category: Economics
Are the French lazy?
Olivier Blanchard writes:
The French are not lazy. They just enjoy leisure more than most (no irony here)
And this is perfectly fine: As productivity increases, it is perfectly reasonable to take it partly as more leisure (fewer hours per week, earlier retirement age), and only partly in income.
He has follow-up points and clarifications in later posts. For instance:
If somebody, in France, wants to work hard, retire late or not all, and work 50-60 hours a week, it is perfectly possible. (this conclusion is based on introspection). Some of us are blessed with exciting jobs. Most of us unfortunately are not.
Here is JFV on that question. And a response from Olivier. Here is John Cochrane.
Perhaps “lazy” is not the right word for this discussion. I view West Europeans in general as providing good quality work per hour, but wanting to work fewer hours, compared to Americans and also compared to many East Asians. Much of that is due to taxes, noting that tax regimes are endogenous to the mores of a population. (Before the 1970s, West Europeans often worked longer hours, by the way.) So it is not only taxes by any means. Furthermore, many (not all) parts of Europe have superior leisure opportunities, compared to what is available in many (not all) parts of the United States. That seems to me the correct description of the reality, not “lazy,” or “not lazy.”
I would add some additional points. First, the world is sometimes in a (short?) period of local increasing returns. I believe we are in such a period now, as evidenced by China and the United States outperforming much of the rest of the world. Maybe the French cannot do anything to leap to such “large economy margins,” but I am not opposed to saying “there is something wrong” with not much trying. Perhaps lack of ambition at the social level is the concept, rather than laziness. I see only some French people, not too many to be clear, throwing themselves onto the bonfire trying to nudge their societal norms toward more ambition.
Second, although the world is not usually in an increasing returns regime, over the long long run it probably is. We humans can stack General Purpose Technologies, over the centuries and millennia, and get somewhere really splendid in a (long-run) explosive fashion. That is another form of increasing returns, even if you do not see it in the data in most individual decades in most countries.
That also makes me think “there is something wrong” with not much trying. And on that score, France can clearly contribute and to some extent already is contributing through its presence in science, math, bio, etc. The French even came up with an early version of the internet. Nonetheless France could contribute more, and I think it would be preferable if social norms could nudge them more in that direction. I do not see comparable potent externalities from French leisure consumption. Maybe the French could teach America how wonderful trips to France are, and thus induce Americans to work more to afford them, and if that is the dominant effect I am happy once again.
So on the proactive side, it still seems to be France could do better than it does, and social welfare likely would rise as a result. That said, they hardly seem like the worst offender in this regard, though you still might egg them on because they have so much additional high-powered potential.
The United States as an Active Industrial Policy Nation
We document and characterize a new history of U.S. federal-level industrial policies by scanning all 12,167 Congressional Acts and 6,030 Presidential Orders from 1973 through 2022. We find several interesting patterns. First, contrary to a common perception, the United States has always been an active industrial policy nation throughout the period, regardless of which party is in power, with 5.4 laws and 3.4 Presidential Orders per year on average containing new industrial policies. Second, we identify roughly 300% more instances of industrial policies than those in the Global Trade Alert (GTA) database during 2008-2022, despite using essentially the same definition. Third, industrial policies in practice are as likely to be justified by national security as by economic competitiveness. Fourth, many U.S. industrial policies incorporate design features that help mitigate potential drawbacks, such as explicit expiration dates and pilot programs for emerging technologies. Finally, based on stock market reactions and firm performance, the identified policies are recognized as economically significant in shifting resource allocations.
That is from a new NBER working paper by
So if I were designing an “industrial policy” for America, my first priority would be to improve and “unstick” its procurement cycles. There may well be bureaucratic reasons that this is difficult to do. But if it can’t be done, then perhaps the U.S. shouldn’t be setting its sights on a more ambitious industrial policy.
A second form of American industrial policy is the biomedical grants and subsidies associated with the National Institutes of Health.
Published in 2019, but still relevant today.
*You Have No Right to Your Culture: Essays on the Human Condition*
By Bryan Caplan, now on sale. From Bryan’s Substack:
My latest book of essays, You Have No Right to Your Culture: Essays on the Human Condition, flips this narrative. All of these demands for “reshaping culture” are thinly-veiled calls for coercing humans. As the title essay explains:
[C]ulture is… other people! Culture is who other people want to date and marry. Culture is how other people raise their kids. Culture is the movies other people want to see. Culture is the hobbies other people value. Culture is the sports other people play. Culture is the food other people cook and eat. Culture is the religion other people choose to practice. To have a “right to your culture” is to have a right to rule all of these choices — and more.
What’s the alternative? Instead of treating capitalism as the root of cultural decay, the world should embrace capitalist cultural competition. Actions speak louder than words; instead of using government to “shape” culture, let’s see what practices, beliefs, styles, and flavors pass the market test. Which in practice, as I explain elsewhere in the book, largely means the global triumph of Western culture, infused with an array of glorious culinary, musical, and literary imports. Nativists who bemoan immigrants’ failure to assimilate are truly blind; the truth is that even non-immigrants are pre-assimilating at a staggering pace.
Recommended. Bryan also offers some essays on what he finds valuable in GMU Econ sub-culture.
My podcast with Frank Fukuyama
Shikha Dalmia moderates, here is the link. Excerpt from the summary:
One reason for the populist revolt in America is the notion of the “deep state”—that an unaccountable bureaucracy is secretly ruling the country. Frank and Tyler come from very different intellectual traditions. Frank, a centrist, is a student of Max Weber and Tyler is a limited government libertarian. Yet they have both argued that liberal states in complex modern societies need a functional bureaucracy—a.k.a. state capacity—to deliver public goods and solve collective action problems. But they also have a ton of disagreements, especially on just how broken American governance is—and they duke it out in a spirited discussion.
And an excerpt from me:
Cowen: I don’t think American state capacity historically is that weak. We built this incredible empire, often unjustly. We put a man on the moon. We developed the atom bomb. We’re leaders in aviation and computers in part because of government. A lot of our state governments work really quite well. It’s a mixed bag, but I think we’d be in the world’s top 10 easily. Noah Smith had a great blog post on this.
Self-recommending! And yes with tons of disagreement, the dialogue is a good overview of where my views are at in this moment, stated super clearly as usual. There is a transcript at the link, it is easy to read through the slight typos.
Announcing the 1991 Fellowship at Mercatus
Mercatus is launching the 1991 Fellowship, a full-time paid fellowship for up to three years, to identify and support early-career policy professionals working on state-level policy reform in India.
Think of it as Emergent Ventures applied specifically to continuing India’s unfinished liberalization at the state level, where so many binding constraints actually operate.
Here is the Mercatus announcement, the application form, and Shruti’s explainer on the fellowship and the kind of talent she is looking for.
Recommended!
The economics of currency values
That is the topic of my latest Free Press column, here is one excerpt:
What else are currency values telling us today? The Japanese yen continues a very weak run, now coming in at about 158 to the U.S. dollar. I can recall when it was common for the yen to stand at about 100 to the dollar, as recently as 2016, so that is a significant depreciation.
Japan usually has a lower inflation rate than the U.S., so why is the yen so weak? Part of the problem is the fiscal position of the Japanese government. The current ratio of Japan’s government debt to its GDP is over 200 percent; in other words, Japan’s government owes twice as much as the country’s entire annual economic output. Unlike the U.S., Japan does not have the global reserve currency, nor the world’s strongest military. Furthermore, Japanese interest rates have been rising lately, which makes it harder for the government to keep borrowing to finance the debt. There is some small but nontrivial risk of the country entering a downward spiral, where higher interest rates worsen the fiscal position, which in turn leads to higher interest rates, and so on, ending in a financial crisis.
Iran and the United States are discussed as well.
Carrying costs exceed liquidity premium, South Korean edition
A declining number of dog meat farms in Korea, driven by government efforts to root out the centuries-old practice of dog meat consumption, has raised questions about what will happen to the dogs currently in the system between now and when the ban takes effect in February 2027.
The Ministry of Agriculture, Food and Rural Affairs has confirmed that at least 468,000 dogs are currently kept on farms in cages nationwide, or at some 5,900 related businesses, including slaughterhouses, distributors and restaurants. Following the ban, there are few clear plans about how the dogs will be cared for, raising the possibility of some being left to fend for themselves in the wild.
State-run canine shelters across the country, often operated by local governments, are already at full capacity, according to Humane World for Animals Korea, a non-governmental organization dedicated to animal welfare. They say the country is far from prepared to provide a safe new life for the massive number of dogs expected to be freed.
Here is the full story, via Benjamin.
Duke Summer Institute on the History of Economics
The Center for the History of Political Economy at Duke University will be hosting another Summer Institute on the History of Economics from June 2-11, 2026. The program is designed for students in graduate programs in economics, though students in graduate school in other fields as well as recently minted PhDs will also be considered.
Students will be competitively selected and successful applicants will receive free housing, access to readings, and stipends for travel and food. The deadline for applying is March 9.
We are very excited about this year’s program, which will focus on giving participants the tools to set up and teach their own undergraduate course in the history of economic thought. There will also be sessions devoted to showing how concepts and ideas from the history of economics might be introduced into other classes. The sessions will be run by Duke faculty members Jason Brent, Bruce Caldwell, Kevin Hoover, and Steve Medema. More information on the Summer Institute is available at our website, https://hope.econ.duke.edu/2026-summer-institute
The Tyranny of the Complainers II
The Los Angeles City Council recently voted to increase the fee to file an objection to new housing. The fee for an “aggrieved person” to file an objection to development is currently $178 and will rise to $229. Good news, right? But here’s the rest of the story: it costs the city about $22,000 to investigate and process each objection. This means objections are subsidized by roughly $21,800 per case—a subsidy rate of nearly 99%.
Meanwhile, on the other side of the equation:
While fees will remain relatively low for housing project opponents, developers will have to pay $22,453 to appeal projects that previously had been denied.
In other words, objecting to new housing is massively subsidized, while appeals to build new housing are charged at full cost—more than 100 times higher than aggrieved complainer fees. This appears to violate the department’s own guidelines, which state:
When a service or activity benefits the public at large, there is generally little to no recommended fee amount. Conversely, when a service or activity wholly benefits an individual or entity, the cost recovery is generally closer or equal to 100 percent.
Expanding housing supply benefits the public at large, while objections typically serve narrow private interests. Thus, by the department’s own logic, it’s the developers who should be given low fees not the complainers.
Addendum: See also my previous post The Tyranny of the Complainers.
Seb Krier
I think this is spot on. The most useful work in the coming years will be about leveraging AI to help improve and reform liberal democracy, the rule of law, separation of powers, free speech, coordination, and constitutional safeguards.
One heuristic I have for AI is: if somone can instantiate their preference or desire really easily, if principal agent problems are materially reduced, if you can no longer rely on inefficiency or bloat as indirect hedge – then the ‘rules of the game’ matter more than ever.
These are all very difficult questions with or without AI. And I’m concerned with two things in particular: first, the easy appeal of anti-elite populism – people who just think ‘well let’s have vetocracy everywhere, let’s leverage the emotions of the masses for short term gain’.
And second, the appeal of scheme-y behaviour – instrumental convergence for political operators. This is harder to pin down, but basically a variant of “I want goal X, so anything that gets me closer to this goal is good” – what leads to all sorts of bad policy and unsavoury alliances.
And instead of trying to 4D chess it or try to recreate politics from first principles, I think technologists should actively enage with experts in all sorts of discplines: constitutional scholars, public choice economists, game theorists etc. Converesely, many of these experts should engage with technologists more instead of coping with obsolete op-eds about how AI is fake or something.
Lastly, improved AI capabilities means you can now use these systems for more things than you could have before. I couldn’t write software a year ago and now I can create a viable app in a day. This dynamic will continue, and will reward people who are agentic and creative.
Are you a local councillor? Well now you have 1000 agents at your disposal – what can you now that that was otherwise unthinkable? Are you someone who lives in their district? Now you have even better tools to hold them to account. Are you an academic? Great, now consider how the many bylaws, rules, structures, institutions, incentives are messing up incentives and progress, what should be improved, and how to get streamlined coordination rather than automated obstruction.
Here is the link. Here is the related Dean Ball tweet.
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.
Sectoral shifts in supply, wartime agriculture edition
It is all the more remarkable, then, that within six years Britain’s agricultural output had transformed, more profoundly and at a faster pace than any time since the start of the Industrial Revolution. The most urgent need was to provide a substitute for all that previously imported foreign wheat. In 1939, Britain only had 11.8 million acres of suitable land under the plough, compared to 17.3 million acres of grass and pastureland. Four years later those figures had been almost exactly reversed — to 17.3 million and 11.4 million acres respectively. The amount of tillage soil devoted to wheat had doubled. Just over 4.2 million harvested tons of wheat, barley and oats had become 7.6 million tons. By 1943 the potato crop was almost twice as big as it had been in 1939. Less pastureland meant fewer animals, and so a veritable massacre on pork and poultry farms ensued. By 1943 there were almost 30 million fewer British chickens and 2.2 million fewer pigs than pre-war numbers. Cows were spared — but strictly for milk production, not beef.
That is from the new and excellent book by Alan Allport, Advance Britannia: The Epic Story of the Second World War, 1942-1945.
Measuring Efficiency and Equity Framing in Economics Research
Using LLMs:
We measure how frontier research frames what is normatively at stake along the efficiency and equity dimension. We develop and validate an LLM-based measurement pipeline and apply it to 27,464 full-text journal articles from 1950 to 2021. Efficiency focused framing rises through the late 1980s, then declines as equity related framing expands after 1990, especially in applied work and policy evaluations. By 2021, papers with an equity component are about as common as papers framed purely around efficiency. President transmittal letters in the Economic Report of the President show a similar post 1990 shift toward equity, providing an external benchmark.
Here is the new NBER working paper by . I take this to be a sign of radical decline in the quality of our profession. I am all for welfare economics considering values other than efficiency. How about liberty, opportunity, and merit? Actual people, especially Americans, care about those too. The longstanding focus on equity as the relevant alternative to efficiency is one of the most blatant politicizations of economic research you will find. Most people doing it are not even aware of that, they simply take for granted that is the relevant trade-off.
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.