Category: Uncategorized
Why do workers dislike inflation?
How costly is inflation to workers? Answers to this question have focused on the path of real wages during inflationary periods. We argue that workers must take costly actions (“conflict”) to have nominal wages catch up with inflation, meaning there are welfare costs even if real wages do not fall as inflation rises. We study a menu-cost style model, where workers choose whether to engage in conflict with employers to secure a wage increase. We show that, following a rise in inflation, wage catchup resulting from more frequent conflict does not raise welfare. Instead, the impact of inflation on worker welfare is determined by what we term “wage erosion”—how inflation would lower real wages if workers’ conflict decisions did not respond to inflation. As a result, measuring welfare using observed wage growth understates the costs of inflation. We conduct a survey showing that workers are willing to sacrifice 1.75% of their wages to avoid conflict. Calibrating the model to the survey data, the aggregate costs of inflation incorporating conflict more than double the costs of inflation via falling real wages alone.
That new paper is by
Wednesday assorted links
1. Stanford remote work conference will be held in person.
2. What the other people say too.
3. What is bottlenecking progress in chemistry?
4. Prizes for submitting difficult questions for AIs.
5. Can AI improve health care pricing?
6. Some new and important YIMBY vs. NIMBY results, using AI, by Arpit Gupta and co-authors.
7. Announcing the meta-science podcast from Institute for Progress (I will have a forthcoming installment in it, the other participants are excellent).
8. Joshua Rothman on Olivier Roy (New Yorker).
What Fusion Energy Can Learn From Biotechnology
Fusion energy is currently facing many of the same opportunities and challenges as the biotechnology industry of the 1970s: exciting scientific and engineering breakthroughs that could change the course of human history, with sufficient public and private funding, more effective business models, and appropriate regulatory oversight. A number of lessons can be learned from the last 50 years of biotechnology industry history, which lead to five proposed initiatives for accelerating progress in fusion: the creation of a university intellectual-property consortium; the standardization of fusion energy milestones along with fusion rating agencies to certify their achievement; the development of new financing and business models to fund the various stages of fusion progress; a coordinated plan for two-sided outreach, education, and engagement at all levels from K–12 to policymakers and the general public; and managing fusion initiatives as part of a broader ecosystem. Applying these historical lessons today can accelerate the development of fusion towards the same level of commercial success and human impact that biotech has achieved.
That is from a new paper by Andrew W. Lo and Dennis Whyte.
Scholars in support of the Moraes Brazil decision against X
Here is the link, in Portuguese, here is part of a Claude translation:
We, the undersigned, wish to express our deep concern about the ongoing attacks by Big Tech companies and their allies against Brazil’s digital sovereignty. The Brazilian judiciary’s dispute with Elon Musk is just the latest example of a broader effort to restrict the ability of sovereign nations to define a digital development agenda free from the control of mega-corporations based in the United States. At the end of August, the Brazilian Supreme Federal Court banned the X platform from Brazilian cyberspace for failing to comply with court decisions that required the suspension of accounts that instigated right-wing extremists to participate in riots and occupy the Legislative, Judicial, and Governmental palaces on January 8, 2023. Subsequently, President Lula da Silva made clear the Brazilian government’s intention to seek digital independence: to reduce the country’s dependence on foreign entities for data, AI capabilities, and digital infrastructure, as well as to promote the development of local technological ecosystems. In line with these objectives, the Brazilian state also intends to force Big Tech to pay fair taxes, comply with local laws, and be held accountable for the social externalities of their business models, which often promote violence and inequality.
These efforts have been met with attacks from the owner of X and right-wing leaders who complain about democracy and freedom of expression. But precisely because digital space lacks internationally and democratically decided regulatory agreements, large technology companies operate as rulers, deciding what should be moderated and what should be promoted on their platforms. Moreover, the X platform and other companies have begun to organize, along with their allies inside and outside the country, to undermine initiatives aimed at Brazil’s technological autonomy. More than a warning to Brazil, their actions send a worrying message to the world: that democratic countries seeking independence from Big Tech domination risk suffering disruptions to their democracies, with some Big Tech companies supporting far-right movements and parties.
The Brazilian case has become the main front in the evolving global conflict between digital corporations and those seeking to build a democratic and people-centered digital landscape focused on social and economic development. Technology companies not only control the digital world, but also lobby and operate against the public sector’s ability to create and maintain an independent digital agenda based on local values, needs, and aspirations. When their financial interests are at stake, they work happily with authoritarian governments. What we need is sufficient digital space for states to direct technologies by putting people and the planet ahead of private profits or unilateral state control.
All those who defend democratic values must support Brazil in its quest for digital sovereignty. We demand that Big Tech cease their attempts to sabotage Brazil’s initiatives aimed at building independent capabilities in artificial intelligence, public digital infrastructure, data governance, and cloud services. These attacks undermine not only the rights of Brazilian citizens but the broader aspirations of all democratic nations to achieve technological sovereignty. We also call on the Brazilian government to be firm in implementing its digital agenda and to denounce the pressures against it. The UN system and governments around the world should support these efforts.
Signed by Acemoglu, Zucman, Varoufakis, Cory Doctorow, Morozov, Mazzucato, Piketty, and many others. Somehow no one is talking about this petition and its embrace of censorship?
Via Pedro. And you will find some media coverage in Portuguese here.
Tuesday assorted links
2. Who is the greatest British novelist of all time? You get to vote, too.
3. How far can Irvine (CA) go?
4. How and why drug traffickers are infiltrating Costa Rica (NYT).
5. Mr. Beast YouTube hiring and production guide.
6. Chinese do Mun vs. Ricardo, on trade, violent cartoon.
7. Recycled paper and cardboard possibly are bad for the chemical content that leeches away from them?
State capacity and economic development
I do not in general trust such methods, but the conclusions are not unwelcome to me:
I provide new empirical estimates of the effect of state capacity on economic development across countries over the period 1960–2022. Specifically, I construct a comprehensive state capacity index based on six different dimensions of effective state institutions available in the Varieties of Democracy (V-Dem) dataset. Then, I estimate heterogeneous parameter models under a common factor framework. My empirical strategy explicitly allows the growth effect of state capacity to differ across countries and accounts for unobserved common factors. My preferred estimates indicate that a one-standard-deviation increase in my V-Dem-based state capacity index predicts a rise in income per person by roughly 6%–7%. The magnitude of such impact equates to less than half of that implied by conventional estimates obtained under highly restrictive assumptions of slope homogeneity and cross-sectional independence. Furthermore, I provide partial evidence suggesting that worldwide heterogeneity in the economic importance of state capacity is deeply rooted in prehistorically determined population diversity, state history, long-term relatedness between countries, and interpersonal trust.
That is from a new paper by Trung V. Vu, via the excellent Kevin Lewis. I am never sure if such results show anything more than “most good things come together at the macro level.”
Monday assorted links
1. Markets in church real estate. You can expect their business to grow.
2. Not Quite Past. For instance, make your own Delftware using AI. Here is further information.
3. Smart goose deterrent system.
4. Tracking SEC inquiries using geolocation data.
5. Metformin investigations (speculative).
6. Does alcohol regulation boost the populist Right?
7. China vs. the Philippines update (NYT).
Are “anchor babies” underrated?
Did you worry about the 2020 fall in U.S. fertility? Well, ponder this:
Birth rates in Canada and the USA declined sharply in March 2020 and deviated from historical trends. This decline was absent in similarly developed European countries. We argue that the selective decline was driven by incoming individuals, who would have travelled from abroad and given birth in Canada and the USA, had there been no travel restrictions during the COVID-19 pandemic. Furthermore, by leveraging data from periods before and during the COVID-19 travel restrictions, we quantified the extent of births by incoming individuals. In an interrupted time series analysis, the expected number of such births in Canada was 970 per month (95% CI: 710-1,200), which is 3.2% of all births in the country. The corresponding estimate for the USA was 6,700 per month (95% CI: 3,400-10,000), which is 2.2% of all births. A secondary difference-in-differences analysis gave similar estimates at 2.8% and 3.4% for Canada and the USA, respectively. Our study reveals the extent of births by recent international arrivals, which hitherto has been unknown and infeasible to study.
That is from a new paper by Amit N. Sawant and Mats J. Stensrud, via the excellent Kevin Lewis.
Sunday assorted links
1. A new mode of national defense for Europe?
2. AI creating a ten-minute podcast on how to practice thinking. Some good advice in there!
3. Robert Moses, The Power Broker, finally coming to eBook September 16.
4. John Stossel on election prediction markets.
5. Why is fiction no longer interested in financial complexity (FT).
USA fact of the day
Surprised to learn that the US is below the OECD average for out of pocket health care spending as a fraction of per capita consumption, with virtually the same % as Canada.
That is Jason Abaluck, via the wisdom of Garett Jones.
Saturday assorted links
1. Is there a rationale for natural monopoly regulation in AI services?
2. Three mistakes in the moral mathematics of existential risk. I don’t agree with everything in there, but quite an interesting piece, forthcoming in Ethics by David Thorstad.
3. Claims about o1.
4. Good article about Haitians settling in Alabama.
5. The Zvi on a bunch of things, including AI superforecasting and recent claims.
The economics of ride-sharing
This paper examines the impact of the emergence of the “gig economy” on the broader labor market by exploiting the staggered introduction of the ridesharing service Uber to American Cities between 2013 and 2018. Using difference-in-differences methods, Callaway and Sant’Anna’s doubly robust difference-in-differences estimator, Chaisemartin and D’Haultoeuille’s time-corrected Wald estimator, and Abadie et al’s synthetic control method, I estimate that Uber’s arrival to a city resulted in decline in the unemployment rate by between a fifth and a half of a percentage point. This suggests that Uber allowed many workers to supplement their earnings during periods of unemployment, framing the ridesharing service as a complement to, rather than a substitute for, traditional employment. I also find some evidence that Uber had a very small positive effect on wages at the lower end of the wage distribution, suggesting that Uber may have altered worker search behavior or affected bargaining power.
Here is the full paper from Tucker Omberg, via Stefan Schubert.
Is the American dream alive and well?
A Free Press Debate.
“Tyler Cowen, Katherine Mangu-Ward, David Leonhardt, and Bhaskar Sunkara duke it out over the state of the economy.” Here is the video, for Free Press subscribers only. A splendid time was had by all.
Friday assorted links
1. “I will not tell you why Brazilians cannot buy cheap and safe sunglasses.” From an economic theorist.
2. Brutalist KFC.
4. The story of Easter Island resilience.
5. “There are no AI-shaped holes lying around.” From Matt Clifford.
6. Elsewhere, okie-dokie. Those are weapons of course, and here is Shah and Korchhoff on AI and warfare (NYT).
8. Starlink is coming to United WiFi.
9. Should economics adopt more norms from software engineering?
Strawberry Alarm Clock!
Deep Prasad writes:
OpenAI just released an AI as smart as most PhDs in physics, mathematics and the life sciences. Wake up. The world will never be the same and in many ways, it will be unrecognizable a decade from now.
Mckay Wrigley is enthusiastic:
o1’s ability to think, plan, and execute is off the charts.
Ethan Mollick says:
There are a lot of milestones that AI passed today. Gold medal at the Math Olympiad among them.
Like Ethan, however, I agree the model is not necessarily better at a lot of non-reasoning tasks. Ethan also notes that AGI will be jagged and uneven.
Subbarao makes guesses as to how it works. Here is some other guy saying a bunch of stuff. And yet further commentary.
Whatever you think of those specific claims, there is a lot of room, as with the John Lennon “Strawberry Fields Forever” demo, to get a lot better yet. For one thing, it can think for longer yet! Whole new doors have been opened, and if you are reading some lukewarm commentary that is probably what the person does not grasp. It is the people who think “…if they can do this…” who have been most successful in predicting the course of AI.
Shital Shah remarks:
This is truly a game changer and step change. It takes us out of slow progress constrained by compute capital and training tokens to rather open world where time is the only limit.
I would love to have one of these (with some tweaks) as my agent.
Taelin claims AGI is achieved. Here is the closest Gary Marcus ever will come to eating crow. Here is how I would troll OpenAI.
Meanwhile, the status of people who do energy policy is due to rise.
Brian Chau recommends it for looking up citations.
Matt Clifford says “crosswords!”
“Model this!”, he demanded of the new fruit. That is Benjamin Manning, economics graduate student at MIT. He got his wish.
Is it “It’s happening!”, or rather “It has happened!”?
Here is another song by Strawberry Alarm Clock, sadly no one got the reference the first time around. It is from the album “Wake Up, It’s Tomorrow”…
Addendum: For context and background, my two previous introductory posts are here and here.