Category: Uncategorized
Adam Smith markets in everything
Gustavo Dudamel — the Oscar L. Tang & H.M. Agnes Hsu-Tang Music & Artistic Director Designate — conducts the World Premiere of the wealth of nations, a highly anticipated commission from the Pulitzer Prize–winning composer David Lang. Inspired by economist Adam Smith’s 1776 magnum opus, Lang dramatizes this foundational work about economics as inspired by Handel’s treatment of Biblical texts in Messiah. “I want this work to be enjoyable and thought-provoking,” says Lang, “encouraging audiences to consider what we truly value.”
Here is the link.
What I’ve been reading
Michael Wachtel, Viacheslav Ivanov: A Symbolist Life. 615 pp. of what Russian/Soviet cultural life was like in the early 20th century. Focuses on broader strands, rather than just the most famous names. Ivanov today is largely forgotten, but he was at the time arguably the most influential figure of that period. “They were mostly a bunch of nuts” is one of my takeaways.
Herbert Breslin and Anne Midgette, The King and I: The Uncensored Tale of Luciano Pavarotti’s Rise to Fame by his Manager, Friend, and Sometime Adversary. Usually people tell me books like this are “delightful,” and then they bore me to tears. This one actually is fantastically fun. “To tell the truth, though, Luciano didn’t care about the money at the beginning. In the early years, he never asked me how much he was going to get paid for a recital. He had only one condition: it had to be sold out.”
Alan Manning, Why Immigration Policy is Hard and How to Make it Better is a thoughtful and balanced look at its topic, recommended.
Alex Mayyasi, Planet Money: A Guide to the Economic Forces that Shape Your Life is a useful introduction to economic concepts.
Nicolas Niarchos, The Elements of Power: A Story of War, Technology, and the Dirtiest Supply Chain on Earth is a good treatment of minerals issues as they relate to the Congo today. It will not make you more bullish on Rwanda, or for that matter the Congo.
Eve MacDonald, Carthage: A New History covers what we do know about those people. That isn’t much at the conceptual level, and I wonder why archaeology has not taught us more there.
I expect I will very much agree with Brink Lindsey, The Permanent Problem: The Uncertain Transition from Mass Plenty to Mass Flourishing.
Saturday assorted links
1. How to improve nursing homes in America.
3. On Nietzsche (Zarathustra always bored me).
5. LLMs describing the best very long-term investment you could have made in 1300 A.D. Excellent answers, I like the GPT one best.
Luis Garicano career advice
Take the messy job:
The other option is to go for a messy job, where the output is the product of many different tasks, many of which affect each other.
The head of engineering at a manufacturing plant I know well must decide who to hire, which machines to buy, how to lay them down in the plant, negotiate with the workers and the higher ups the solutions proposed, and mobilise the resources to implement them. That task is extraordinarily hard to automate. Artificial intelligence commoditizes codified knowledge: textbooks, proofs, syntax. But it does not interface in a meaningful way with local knowledge, where a much larger share of the value of messy jobs is created. Even if artificial intelligence excelled at most of the single tasks that make up her job, it could not walk the factory floor to cajole a manager to redesign a production process.
A management consultant whose job consists entirely of producing slide decks is exposed. A consultant who spends half of her time reading the room, building client relationships, and navigating organizational politics has a bundle AI cannot replicate.
Here is the full letter.
Direct and Indirect Effects of Vaccines: Evidence from COVID-19
Sorry people, but the verdict on this one continues to come in:
We estimate direct and indirect vaccine effectiveness and assess how far the infection-reducing externality extends from the vaccinated, a key input to policy decisions. Our empirical strategy uses nearly universal microdata from a single state and relies on the six-month delay between 12- and 11-year-old COVID vaccine eligibility. Vaccination reduces cases by 80 percent, the direct effect. This protection spills over to close contacts, producing a household-level indirect effect about three-fourths as large as the direct effect. However, indirect effects do not extend to schoolmates. Our results highlight vaccine reach as important to consider when designing policy for infectious disease.
That is from American Economic Journal: Applied Economics, by Seth Freedman, Daniel W. Sacks, Kosali Simon, and Coady Wing. So many different methods and papers are pointing in the same direction…
What should I ask Henry Oliver?
Yes, I will be doing a Conversation with him. We will focus on our mutual readings of Shakespearer’s Measure for Measure, with Henry taking the lead. But I also will ask him about the value of literature, Jane Austen, Adam Smith, Bleak House, his book on late bloomers, and more.
Here is Henry’s (free) Substack. Here is Henry on Twitter.
So what should I ask him?
Friday assorted links
Economic inequality does not equate to poor well-being or mental health
A meta-analysis of 168 studies covering more than 11 million people found no reliable link between economic inequality and well-being or mental health. In other words, living in a place that has large gaps between the rich and poor does not affect these outcomes, with implications for policy.
Here is the Nature link, this claim has been bad science all along.
One bad trend from 2025, diminution of the dollar’s safe haven status
It used to be that if you were worried about the future, you would move into dollars as the safe haven—in finance terms a countercyclical asset, which stays resilient when higher-risk assets fall. But if the United States’ own government and policies are unpredictable, and its economy is volatile, you will look for some other hedges instead. Chaos in the U.S., and particularly in the White House, is pushing investors to find alternatives to the dollar.
And so investment funds have been pouring into the precious metals, boosting their prices. While the current high price of silver reflects many factors, some of them technical and quite specific, the shift in risk attitudes has become pronounced over the last year.
The bottom line is that America is less of a safe haven than it used to be. When President Donald Trump announced his heavy tariff plan on “Liberation Day,” the dollar fell. That’s contrary to ordinary economic theory, which suggests that as Americans send fewer dollars abroad to buy imported goods, the dollar should rise. Traders, though, started to view the United States itself as a source of risk. It felt as if the right thing to do was to run away from the dollar. As a result, the dollar is down nearly 10 percent this year.
Here is more from me at The Free Press.
Thursday assorted links
1. How a research trip to Antarctica deals with time zones (NYT).
3. What kind of books did people buy in 2025? (NYT)
4. Notes on Taiwan.
6. What Shruti has been reading, including about India but not only.
7. On the compute theory of everything.
Dan Wang 2025 letter
Self-recommending, here is the link, here is one excerpt:
People like to make fun of San Francisco for not drinking; well, that works pretty well for me. I enjoy board games and appreciate that it’s easier to find other players. I like SF house parties, where people take off their shoes at the entrance and enter a space in which speech can be heard over music, which feels so much more civilized than descending into a loud bar in New York. It’s easy to fall into a nerdy conversation almost immediately with someone young and earnest. The Bay Area has converged on Asian-American modes of socializing (though it lacks the emphasis on food). I find it charming that a San Francisco home that is poorly furnished and strewn with pizza boxes could be owned by a billionaire who can’t get around to setting up a bed for his mattress.
And:
One of the things I like about the finance industry is that it might be better at encouraging diverse opinions. Portfolio managers want to be right on average, but everyone is wrong three times a day before breakfast. So they relentlessly seek new information sources; consensus is rare, since there are always contrarians betting against the rest of the market. Tech cares less for dissent. Its movements are more herdlike, in which companies and startups chase one big technology at a time. Startups don’t need dissent; they want workers who can grind until the network effects kick in. VCs don’t like dissent, showing again and again that many have thin skins. That contributes to a culture I think of as Silicon Valley’s soft Leninism. When political winds shift, most people fall in line, most prominently this year as many tech voices embraced the right.
Interesting throughout, plus Dan writes about the most memorable books he read in 2025.
Taxation in a strong AI world
Here is Dwarkesh’s tweet, based on his recent paper with Trammell, raising the issue of whether wealth taxes will become desirable in the future. A few points:
1. I think quality homes in good locations will be extremely valuable. Those could be taxed more. You could call that a wealth tax, but arguably it is closer to a “housing services tax.”
2. You could put higher consumption taxes on items the wealthy purchase to a disproportionate degree. Paintings and yachts, and so on. Tom Holden argues: “In a world in which capital is essentially the only input to production, taxing capital reduces the growth rate of the economy. Whereas at present capital taxes have only level effects. So if anything, capital taxes will become less desirable as the labour share falls.”
3. I think the amount of money spent on health care will go up a lot. And people will live much longer, which will further boost the amount spent on health care. Taxing health care more is the natural way to address fiscal problems. Some people will fly abroad for their knee surgeries, but for a long time most health care will be consumed nearby, even in a strong AI world. If the way we keep the budget sane is to have people die at 95 instead of 97, there may be some positive social externalities from the shorter life spans. We also could use some of that money for birth subsidies.
4. As a more general point, capital will not be a perfect substitute for labor, or anything close to that, anytime soon.
5. Final incidence of the AI revolution is not just about the degree of substability of capital for labor. It is also about supply and demand elasticities in goods and services markets. For instance, to the extent AI makes various services much cheaper, real wages are rising not falling. That may or may not be the dominant effect, but do not assume too quickly that wages simply fall.
5b. It is not an equilibrium for capital to simply “have all the goodies.” Let’s say that Simon Legree, using advanced AI, can produce all the world’s output using a single watt of energy. And no one else with an AI company can produce anything to compete with that (this already sounds implausible, right?). If Simon simply hoards all that output, he has no profit, though I guess he can cure his own case of the common cold. The prices for that output have to fall so it can be purchased by someone else. The nature of the final equilibrium here is unclear, but again do not assume all or even most of the returns will stay with capital. That is almost certainly not the case.
Addendum: Here is some follow-up from Dwarkesh. I think he is talking about a world very different from our own, as there is talk of ownership of galaxies. That said, many other people wish to implement his ideas sooner than that.
Wednesday assorted links
1. New data on the economics of LLMs: “Fifth, we estimate preliminary short-run price elasticities just above one, suggesting limited scope for Jevons-Paradox effects.”
2. How much is Germany still using fax machines?
3. Top ten pieces from Works in Progress.
4. MIE claims about Slovenia. Cheap talk, or can this be true?
6. Top economics papers from 2025?
7. The best “best movies of the year” set of lists I have seen.
8. The basics on Sudan. And more ongoing trouble in the Gulf and in East Africa. I hope this is not the big story of the year to come, but fear it may be.
Existential Risk and Growth
By Philip Trammell and Leopold Aschenbrenner, a new paper:
Technological development raises consumption but may pose existential risk. A growing literature studies this tradeoff in static settings where stagnation is perfectly safe. But if any risky technology already exists, technological development can also lower risk indirectly in two ways: by speeding (1) technological solutions and/or (2) a “Kuznets curve” in which wealth increases a planner’s willingness to
pay for safety. The risk-minimizing technology growth rate, in light of these dynamics, is typically positive and may easily be high. Below this rate, technological development poses no tradeoff between consumption and cumulative risk.
Self-recommending…
Tuesday assorted links
1. Ulkar on Kodaly and the cello.
2. “Lowbrow fiction is good sex and highbrow fiction is bad sex.”
3. The economics of Duke University.
4. Beginner’s Guide to the Mahabharata and Ramayana.
5. Andrew Batson on music of the year for him.
6. Model this (claim about Freemasonry and the British police).
7. Zhengdong Wang year end letter on AI.
8. I do not think these particular estimates are reliable, nonetheless murder rates would be much higher if not for medical advances.