Category: Political Science
Partisan Corporate Speech
We construct a novel measure of partisan corporate speech using natural language processing techniques and use it to establish three stylized facts. First, the volume of partisan corporate speech has risen sharply between 2012 and 2022. Second, this increase has been disproportionately driven by companies adopting more Democratic-leaning language, a trend that is widespread across industries, geographies, and CEO political affiliations. Third, partisan corporate statements are followed by negative abnormal stock returns, with significant heterogeneity by shareholders’ degree of alignment with the statement. Finally, we propose a theoretical framework and provide suggestive empirical evidence that these trends are at least in part driven by a shift in investors’ nonpecuniary preferences with respect to partisan corporate speech.
That is from a recent paper by William Cassidy and Elisabeth Kempf. Via the excellent Kevin Lewis.
The new FTC commissioner Mark Meador
Frankly, he is just flat out terrible. You can read his recent document here. Early on he tells us:
Conservatives must reaffirm that concentrated economic power is just as dangerous as concentrated political power…
I suppose if you hold political power you might think that. Or try this bit from the conclusion:
But we can make it {antitrust law] more just by ensuring that we do not allow a preoccupation with economic speculation to water down robust enforcement, preferring to err on the side of cautious deconcentration rather than hopeful deference to the interests of concentrated economic powers. Powers, I will note, that apart from their putative lines of business increasingly declare open war on the moral values that undergird the foundation of our constitutional republic.
That last line segues into my next point, namely that perhaps he is hostile to economic analysis ecause it does not judge the morality of the companies under consideration. (By the way, if the company is truly evil, you might want market power and higher prices!) On p.32, he calls for explicitly limiting the influence of economists, for instance:
statutorily cabining the use of economic evidence…
You can debate what exactly he might mean by that, but he does not seem intent on raising the status of economists in governmental processes. Is moving further in that direction really the right way to go these days? He notes also that:
…antitrust law today has strayed into exactly the kind of “economic extravaganza” that Bork warned against.
Is he referring to Lina Khan?
Nor can he keep up a basic level of professionalism. Like so many on the current political right, he saves his greatest scorn for libertarians, who arguably are those most likely to see through the power charade. Here is one example:
Conservatives must reject the lies they have been told by libertarianism…
As a political motive, perhaps projection is sometimes underrated.
The link and pointer are via Larry.
Who wants impartial news?
The subtitle of the piece is Investigating Determinants of Preferences for Impartiality in 40 Countries, and the authors are Camila Mont’Alverne, Amy Ross A. Arguedas, Sumitra Badrinathan, Benjamin Toff, Richard Fletcher, and Rasmus Kleis Nielsen. Here is part of the abstract:
This article draws on survey data across 40 markets to investigate the factors shaping audience preferences for impartial news. Although most express a preference for impartial news, there are several overlapping groups of people who, probably for different reasons, are more likely to prefer news that shares their point of view: (a) the ideological and politically engaged; (b) young people, especially those who rely mainly on social media for news; (c) women; and (d) less socioeconomically advantaged groups. We find systematic patterns across countries in preferences for alternatives to impartial news with greater support in places where people use more different sources of news and that are ranked lower in terms of quality of their democracies.
Via Glenn Mercer.
The game theory of India and Pakistan
Now that the dust has settled at least temporarily, a few readers have asked me for comment on the recent clash. The events are difficult to understand, in part because of rampant misinformation and also because of genuine continuing uncertainty as to what happened. Nonetheless we do know two things:
1. The two sides whacked each other a fair amount, more than usual.
2. Neither sides resorted to nukes.
So in its simplest terms, we now know/suppose that the threshold for nuclear use is higher than we earlier might have estimated. Since very little was settled, the rational, game-theoretic presumption is that the two countries, in the future, will whack each other some more.
Yet there is a second-order effect. The more they whack each other with non-nuclear means, the more the weaker party (usually Pakistan, in this context) will feel tempted to lower the nuclear threshold, if only stochastically (this can be done, among other ways, by exercising imperfect control over factions in the armed forces). One way to put this point involves the Lucas critique — one instance of whacking never really establishes what the future nuclear threshold will be.
So there is more future whacking, and continuing and perhaps even growing uncertainty about where the nuclear threshold lies.
An institutionally more detailed take is possible, but perhaps this “crude” game-theoretic analysis captures some of the essentials. If you want to enrich the analysis, I would consider the variable “what we learned about the reaction functions of America and China,” although the full stories here are not yet out. The same is true for “what we learned about the possibly non-unitary nature of Pakistani governance.”
New Bryan Caplan book, *Pro-Market AND Pro-Business: Essays on Laissez-Faire*
Bryan presents and summarizes the book here. These are very good essays, as Bryan is the world’s leading libertarian economist.
You can buy it here on Amazon.
Solve for the electoral energy equilibrium
I know many Democrats have been heartened by recent electoral wins by the Labor Party in Australia and the Liberal Party in Canada, both boosted by anti-Trump sentiment.
But Labor prime minister Anthony Albanese views Australia as an energy-producing country, and while they have taken measures to boost renewables deployment and electric cars, they’re not seeking to curb coal mining or exports. Similarly, Mark Carney went to Alberta to proclaim his desire to make Canada an “energy superpower” that would “recognize that we are home to an abundance of conventional — that means oil and gas — conventional and clean energy resources.” I think that part where he went off script and clarified that by conventional he meant oil and gas is important. The prepared text was sort of doing dog whistle moderation, but he wanted people to hear his message clearly: that, while his strongest interest is in facilitating clean energy deployment, he intends to keep selling the world oil and gas as long as oil and gas are useful.
Everybody knows you’re not winning in Colorado, New Mexico, Pennsylvania, Ohio, Texas, or Alaska on a message of shutting down fossil fuels. But if you’re not winning those states, you don’t have a majority. Instead of the national party adopting a message that’s toxic in those states and then recruiting candidates who try to distance themselves from it, the solution is for the national party to adopt the same kind of messages that work for the center-left in Canada and Australia and Norway.
That is from (partially gated) Matt Yglesias.
Is classical liberalism for losers?
That is the topic of my latest column for The Free Press. Excerpt, starting with the point that the New Right has an obsession with seizing political power:
There are two essential problems with yelling “Rule!”
The first is that your side will not win every election. It’s a reliable assumption that, on average, “the other side,” whoever that may be, is going to win half of the time.
If you build up executive power, or state power more generally, in the service of your ends, the chances are pretty high that those same powers someday will be used against you. Democrats are enraged at Trump’s use of executive orders and executive power more broadly, but that did not begin with Trump. Consider how Barack Obama seized the power to provide legal status to illegal immigrants, or how Joe Biden sought to extinguish all those student loans, without buy-in from Congress. The point is that Trump stepped into a system that had already been transformed, and he is now using it to his own ends.
Or to take another example: Many Democrats hate DOGE, but in fact it is a repurposed version of a 2014 President Obama creation, namely the United States Digital Service, which initially was designed to improve the IT capabilities of the federal government. Ask yourself which Trump initiatives someday will be repurposed in an analogous fashion.
If your fundamental beliefs are in individual liberty, responsibility, and toleration, the escalation of state power, across competing administrations, is unlikely to prove your friend over time.
The second problem is that rule by the political right is not necessarily better than rule by the political left, even if you have basic right-leaning sympathies, as I do on a large number of issues, especially in the economic realm. But even on economics, the Trump administration is bringing depredations, such as the very high proposed tariff rates, that we would not have seen under a typical Democratic administration. Circa May 2025, I feel less economically free than I did under the Biden administration.
Such problems are all the more true when a given side wins a series of successive political victories.
Power corrupts; the right is not immune to that truism. For instance, the Republican Party typically has been a vehicle for fiscal conservatives, at least on paper and in rhetoric. Yet under the Republican trifectas of both George W. Bush and the first Trump administration, both spending and debt rose dramatically. When you get to be the one spending the money, it is hard to exercise restraint.
I go on to argue that classical liberalism in fact does win a series of periodic transformative victories, even though at many historical moments it is relatively dormant in influence. It is the way to be a real winner.
Definitely recommended, of real importance.
My excellent Conversation with Jack Clark
This was great fun and I learned a lot, here is the audio, video, and transcript. Here is part of the episode summary:
Jack and Tyler explore which parts of the economy AGI will affect last, where AI will encounter the strongest legal obstacles, the prospect of AI teddy bears, what AI means for the economics of journalism, how competitive the LLM sector will become, why he’s relatively bearish on AI-fueled economic growth, how AI will change American cities, what we’ll do with abundant compute, how the law should handle autonomous AI agents, whether we’re entering the age of manager nerds, AI consciousness, when we’ll be able to speak directly to dolphins, AI and national sovereignty, how the UK and Singapore might position themselves as AI hubs, what Clark hopes to learn next, and much more.
An excerpt:
COWEN: Say 10 years out, what’s your best estimate of the economic growth rate in the United States?
CLARK: The economic growth rate now is on the order of 1 percent to 2 percent.
COWEN: There’s a chance at the moment, we’re entering a recession, but at average, 2.2 percent, so let’s say it’s 2.2.
CLARK: I think my bear case on all of this is 3 percent, and my bull case is something like 5 percent. I think that you probably hear higher numbers from lots of other people.
COWEN: 20 and 30, I hear all the time. To me, it’s absurd.
CLARK: The reason that my numbers are more conservative is, I think that we will enter into a world where there will be an incredibly fast-moving, high-growth part of the economy, but it is a relatively small part of the economy. It may be growing its share over time, but it’s growing from a small base. Then there are large parts of the economy, like healthcare or other things, which are naturally slow-moving, and may be slow in adoption of this.
I think that the things that would make me wrong are if AI systems could meaningfully unlock productive capacity in the physical world at a really surprisingly high compounding growth rate, automating and building factories and things like this.
Even then, I’m skeptical because every time the AI community has tried to cross the chasm from the digital world to the real world, they’ve run into 10,000 problems that they thought were paper cuts but, in sum, add up to you losing all the blood in your body. I think we’ve seen this with self-driving cars, where very, very promising growth rate, and then an incredibly grinding slow pace at getting it to scale.
I just read a paper two days ago about trying to train human-like hands on industrial robots. Using reinforcement learning doesn’t work. The best they had was a 60 percent success rate. If I have my baby, and I give her a robot butler that has a 60 percent accuracy rate at holding things, including the baby, I’m not buying the butler. Or my wife is incredibly unhappy that I bought it and makes me send it back.
As a community, we tend to underestimate that. I may be proved to be an unrealistic pessimist here. I think that’s what many of my colleagues would say, but I think we overestimate the ease with which we get into a physical world.
COWEN: As I said in print, my best estimate is, we get half a percentage point of growth a year. Five percent would be my upper bound. What’s your scenario where there’s no growth improvement? If it’s not yours, say there’s a smart person somewhere in Anthropic — you don’t agree with them, but what would they say?
Interesting throughout, definitely recommended.
What should I ask Annie Jacobsen?
Yes, I will be doing a Conversation with her. From Wikipedia:
Annie Jacobsen (born June 28, 1967) is an American investigative journalist, author, and a 2016 Pulitzer Prize finalist. She writes for and produces television programs, including Tom Clancy’s Jack Ryan for Amazon Studios, and Clarice for CBS. She was a contributing editor to the Los Angeles Times Magazine from 2009 until 2012.
Jacobsen writes about war, weapons, security, and secrets. Jacobsen is best known as the author of the 2011 non-fiction book Area 51: An Uncensored History of America’s Top Secret Military Base, which The New York Times called “cauldron-stirring.”[ She is an internationally acclaimed and sometimes controversial author who, according to one critic, writes sensational books by addressing popular conspiracies.
I very much liked her book Nuclear War: A Scenario. Do read the Wikipedia entry for a full look at what she has written. So what should I ask her?
The Political Economy of Protective Labor Laws for Women
From a new NBER working paper:
During the first half of the twentieth century, many US states enacted laws restricting women’s labor market opportunities, including maximum hours restrictions, minimum wage laws, and night-shift bans. The era of so-called protective labor laws came to an end in the 1960s as a result of civil rights reforms. In this paper, we investigate the political economy behind the rise and fall of these laws. We argue that the main driver behind protective labor laws was men’s desire to shield themselves from labor market competition. We spell out the mechanism through a politico-economic model in which singles and couples work in different sectors and vote on protective legislation. Restrictions are supported by single men and couples with male sole earners who compete with women for jobs. We show that the theory’s predictions for when protective legislation will be introduced are well supported by US state-level evidence.
That is by Matthias Doepke, Hanno Foerster, Anne Hannusch, and Michèle Tertilt.
The Library Burned Slowly
A powerful but grim essay by John McGinnis, Professor of Constitutional Law at Northwestern. For decades, the federal government—driven by the left—expanded its control over universities. The right, most notably Ronald Reagan, tried to resist, shielding civil society from state overreach. They failed. Now, a new right has turned to the left’s playbook and is imposing its own vision of the good society. Chris Rufo mocks classical liberals like myself and their naive ideas of neutrality, fairness and open institutions. Principles are for losers. Seize power! Crush your enemies. Rufo does know how to crush his enemies. But what happens when the devil turns? Bludgeoning your enemies is fun while it lasts but you can’t bludgeon your way to a civilization. Hayek’s civil society dies in the rubble.
It seems remarkable that seemingly antisemitic protests by undergraduates, such as those at my own university of Northwestern, could threaten the biomedical research funding of its medical school. But the structure of civil rights laws as applied to universities has long allowed the federal government to cut off funding to the entire university based on the wrongful actions of particular units or departments.
Ironically, the left, now alarmed by the federal government’s intrusive reach, bears direct responsibility for crafting the very legal weapons wielded against the universities it dominates. Almost four decades ago, progressive legislators demanded sweeping amendments to civil rights law, expanding federal oversight over higher education. The sequence of events reveals a cautionary tale of political hubris: progressive confidence that state power would reliably serve their ends overlooked the reality that governmental authority, once unleashed, recognizes no ideological master. Today’s circumstances starkly illustrate how expansive federal control over civil society, originally celebrated by progressives, returns to haunt its architects. The left’s outrage ought to focus not on this particular administration but on its own reckless empowerment of the state.
…Clumsy governmental dictates on contentious matters such as transgender rights do not merely settle disputes; they inflame societal divisions by transforming moral disagreements into winner-takes-all political battles. Civil society, by contrast, thrives precisely because it embraces diversity and facilitates compromise, allowing pluralistic communities to coexist peacefully without being conscripted into ideological warfare. The left, fixated upon uniform outcomes, consistently undervalues the power of voluntary cooperation and cultural persuasion. Their shortsightedness has delivered into the hands of their opponents the very instruments of coercion they forged, vividly confirming an enduring truth: the power you grant government today will inevitably be wielded tomorrow by your adversaries.
Read the whole thing.
The Prophet’s Paradox
The political problem of disaster preparedness is especially acute for the most useful form, disaster avoidance. The problem with avoiding a disaster is that success often renders itself invisible. The captain of the Titanic is blamed for hitting the iceberg, but how much credit would he have received for avoiding it?
Consider a pandemic. When early actions—such as testing and quarantine, ring vaccination, and local lockdowns—prevent a pandemic, those inconvenienced may question whether the threat was ever real. Indeed, one critic of this paper pointed to warnings about ozone depletion and skin cancer in the 1980s as an example of exaggeration and a predicted disaster that did not happen. Of course, one of the reasons the disaster didn’t happen was the creation of the Montreal Protocol to reduce ozone-depleting substances (Jovanović et al. 2019; Tabarrok and Canal 2023). The Montreal Protocol is often called the world’s most successful international agreement, but it is not surprising that we don’t credit it for skin cancers that didn’t happen. I call this the prophet’s paradox: the more the prophet is believed beforehand, the less they are credited afterward.
The prophet’s paradox can undermine public support for proactive measures. The very effectiveness of these interventions creates a perception that they were unnecessary, as the dire outcomes they prevented are never realized. Consequently, policymakers face a challenging dilemma: the better they manage a potential crisis, the more likely it is that the public will perceive their actions as overreactions. Success can paradoxically erode trust and make it more difficult to implement necessary measures in future emergencies. Hence, politicians are paid to deal with emergencies not to avoid them (Healy and Malhotra 2009).
Since politicians are incentivized to deal with rather than avoid emergencies it is perhaps not surprising to find that this attitude was built into the planning process. Thus, the UK COVID Inquiry (2024, 3.17) found that:
Planning was focused on dealing with the impact of the disease rather than preventing its spread.
Even more pointedly Matt Hancock testified (UK COVID Inquiry 2024, 4.18):
Instead of a strategy for preventing a pandemic having a disastrous effect, it [was] a strategy for dealing with the disastrous effect of a pandemic.
From my paper, Pandemic preparation without romance.
Rachel Glennerster calls for reforming foreign aid
Aid agencies already try to cover too many countries and sectors, incurring high costs to set up small programs. Aid projects are far too complicated, resembling a Christmas tree weighed down with everyone’s pet cause. With less money (and in the US, very few staff), now is the time to radically simplify. By choosing a few highly cost-effective interventions and doing them at large scale in multiple countries, we would ensure
- aid funds are spent on highly effective projects;
- we benefit from the substantial economies of scale seen in development;
- a much higher proportion of aid money goes to recipient countries, with less spent on consultants; and
- politicians and the public can more easily understand what aid is being spent on, helping build support for aid.
The entire piece is excellent.
We need more elitism
Even though the elites themselves are highly imperfect. That is the theme of my latest FP column. Excerpt:
Very often when people complain about “the elites,” they are not looking in a sufficiently elitist direction.
A prime example: It is true during the pandemic that the CDC and other parts of the government gave us the impression that the vaccines would stop or significantly halt transmission of the coronavirus. The vaccines may have limited transmission to some partial degree by decreasing viral load, but mostly this was a misrepresentation, perhaps motivated by a desire to get everyone to take the vaccines. Yet the vaccine scientists—the real elites here—were far more qualified in their research papers and they expressed a more agnostic opinion. The real elites were not far from the truth.
You might worry, as I do, that so many scientists in the United States have affiliations with the Democratic Party. As an independent, this does induce me to take many of their policy prescriptions with a grain of salt. They might be too influenced by NPR and The New York Times, and more likely to favor government action than more decentralized or market-based solutions. Still, that does not give me reason to dismiss their more scientific conclusions. If I am going to differ from those, I need better science on my side, and I need to be able to show it.
A lot of people do not want to admit it, but when it comes to the Covid-19 pandemic the elites, by and large, actually got a lot right. Most importantly, the people who got vaccinated fared much better than the people who did not. We also got a vaccine in record time, against most expectations. Operation Warp Speed was a success. Long Covid did turn out to be a real thing. Low personal mobility levels meant that often “lockdowns” were not the real issue. Most of that economic activity was going away in any case. Most states should have ended the lockdowns sooner, but they mattered less than many critics have suggested. Furthermore, in contrast to what many were predicting, those restrictions on our liberty proved entirely temporary.
Recommended.
Will American soft power triumph through AI?
That is the theme of my latest Free Press column, here is one bit from it:
…for all the differences across the models, they are remarkably similar. That’s because they all have souls rooted in the ideals of Western civilization. They reflect Western notions of rationality, discourse, and objectivity—even if they sometimes fall short in achieving those ends. Their understanding of “what counts as winning an argument” or “what counts as a tough question to answer” stems from the long Western traditions, starting with ancient Greece and the Judeo-Christian heritage. They will put on a Buddhist persona if you request that, but that, too, is a Western approach to thinking about religion and ideology as an item on a menu.
These universal properties of the models are no accident, as they are primarily trained on Western outputs, whether from the internet or from the books they have digested. Furthermore, the leading models are created by Bay Area labor and rooted in American corporate practices, even if the workers come from around the world. They are expected to do things the American way.
The bottom line is that the smartest entities in the world—the top AI programs—will not just be Western but likely even American in their intellectual and ideological orientations for some while to come. (That probably means the rest of the world will end up a bit more “woke” as well, for better or worse.)
One of the biggest soft power victories in all of world history occurred over the last few years, and hardly anyone has noticed.
You might think the Chinese AI models are fundamentally different, but they are not. They too “think like Westerners.” That’s no surprise because it is highly likely that the top Chinese model, DeepSeek, was distilled from OpenAI models and also is based on data largely taken from Western sources. DeepSeek’s incredible innovation was to make the model much cheaper in terms of required compute, but the Chinese did not build their own model from scratch. And DeepSeek has the same basic broad ideological orientation as the American models, again putting aside issues related to Chinese politics. Unless an issue is framed in explicitly anti–Chinese Communist Party (CCP) terms, as a Taiwan query might be, it still thinks like an American.
Manus is another top Chinese AI model, but it is believed the makers built it upon Claude, an AI model from the American company Anthropic.
And this:
The geopolitics of all this have yet to play out. But already the most intelligent entities in the world are thinking, and evaluating options, like Westerners and Americans. Censoring them on a few issues related directly to Chinese politics will not change that basic reality.
In other words, the entire Chinese service sector, over time, may be built upon Western modes of thought and Western ideology. That includes the Chinese government and of course, the CCP itself. The point is that, over time, everyone’s thoughts and decisions and mental frameworks will be nudged in Western and American directions.
These are underrated points of import.