Mushroom facts of the day
You would be surprised to learn that almost 69% of the US mushroom production occurs in the borough of Kennett Square, Pennsylvania. It is a small town of about 6000 people, but mushroom-growing facilities around town produce almost 451 million pounds of mushrooms annually (2024). 451 million pounds of mushrooms would occupy about 45 American football fields or 35 soccer fields. The dollar value of mushroom production in the US is roughly $ 1 billion per year.
China is the undisputed leader in mushroom production. China accounts for 93% of the world’s global mushroom production.
That is from Rhishi Pethe, here is the full story, via Anecdotal. Much of the piece is about why mushroom production is switching to Canada.
Sunday assorted links
1. Why AI can simulate but not instantiate consciousness.
2. Why you should start a company instead of working in aid.
3. Evidence that tennis has become less interesting?
4. A smidgen more on wet market origins.
5. Who is most (least) opposed to European immigration?
6. John Burn-Murdoch on the Jevons paradox and AI employment effects (FT).
7. Can plants sense the sound of rain?
8. Zena.
Generative AI and Entrepreneurship
This paper studies how Generative AI (Gen AI) is reshaping the U.S. startup ecosystem. Exploiting the release of ChatGPT, we show that startups with greater pre-release Gen AI task exposure reduced employment within two quarters, primarily among junior and implementation roles. Displaced workers experienced longer unemployment spells and moved to lower-paying but less exposed jobs. Conversely, exposed startups increased productivity, scaled faster, and accelerated through financing rounds. Venture capital shifted toward frequent, smaller investments, boosting new firm formation. Overall, incumbent contraction was offset by new firm formation, leaving aggregate employment unchanged but shifting composition to senior roles.
That is from a new and important paper by Abhinav Gupta, Franklin Qian, Elena Simintz, & Yifan Sun.
Will AI save the U.S. fiscal situation?
A tenth of a percentage point of extra productivity growth — well within the range of plausible near-term AI effects — raises the fundamental value of U.S. government debt by $1.3 trillion. If markets fully priced this in, nominal Treasury yields would fall by about 70 basis points.
Half a percentage point of extra growth would raise the value of the debt by $6.5 trillion. For context: under the CBO baseline, the debt-to-GDP ratio rises from 100% today to 172% by 2055. Under the +0.5pp scenario, it stabilizes near 124%. Debt-to-GDP stops exploding. That is an enormous change in the fiscal outlook, and it comes from a rate of growth only modestly above the post-2000 average…
There is a second, subtler point. Because revenue scales as GDP^1.07, the fundamental value of the debt is a convex function of productivity growth. A +1pp growth shock raises value by 108%; a −1pp shock only lowers it by 87%.
That asymmetry means bondholders gain from uncertainty, not just from higher expected growth. If markets become more uncertain about AI’s long-run productivity impact, and that uncertainty is mean-preserving, Treasury valuations should still rise. Holding expected growth fixed, ±0.5pp of growth uncertainty is worth about $0.7 trillion in convexity value. Treasuries embed a long call option on AI, and the option is valuable even when the strike is out of the money.
Here is more from Hanno Lustig, with Howard Kung and James Paron. Here is the full paper. These are of course very important results, kudos to the authors. Via the excellent Samir Varma.
Saturday assorted links
2. Claude doing stand-up comedy, the video is AI too.
3. Thirty more lines from Empedocles have been found.
4. Latin America’s oil resurgence.
5. 25 dead at the Haitian Citadelle.
6. A paean to the earlier University of Chicago law school.
7. Can AI agents read a social science paper and write the code from scratch to reproduce its results?
The Pernicious Trade Account
The trade accounts are among the most pernicious statistics ever collected. It’s long been remarked, for example, that merely by calling something a “deficit” it seems bad even though a current account deficit is matched by a financial account surplus. Put that issue aside, however, because the real problems are much deeper. The international accounts make it appear that individuals, in their ordinary buying and selling, bind us all in a collective endeavor. The accounts take millions of voluntary, mutually beneficial transactions between individuals and firms and repackage them as a relationship between nations—as if “America” were buying from “China”. Many, many experts get this wrong—not just non-economists who are misled by terms like “deficits.”
Don Boudreaux at Cafe Hayek gives a truly excellent example in replying to a reader who asks:
The USA ran trade deficits for 50 years. Those were offset by foreigners’ investments in the USA. Foreigners expect returns on these investments. Doesn’t it mean Americans eventually have to pay those returns to foreigners?
Don’s answer:
No.
The only Americans who are obliged to pay anything to foreigners are Americans who borrowed money from foreigners. (This number includes U.S. citizens-taxpayers whose government borrowed money from foreigners.) But no such obligation exists for other investments that foreigners made in the U.S. – those other investments being equity investments in the U.S. (for example, foreigners buying a restaurant in Houston), purchases of real estate in the U.S., and holding U.S. dollars.
If, for example, the foreign-owned restaurant in Houston goes bankrupt, the loss is fully borne by its foreign owners; no American is obliged to pay anything on that account to foreigners.Of course, foreigners do expect positive returns on all of their U.S. investments, regardless of form. But with the exception of Americans’ repayment of principal and interest on funds that they borrowed from foreigners, no returns that foreigners earn on their investments in America are paid by Americans. If the foreign-owned restaurant in Houston is profitable, those profits are newly created wealth – wealth that’s created by that restaurant’s foreign owners.
In the international commercial accounts, when the restaurant’s foreign owners realize returns on their restaurant – say, by being paid dividends drawn on that restaurant’s profits – it appears that Americans are paying foreigners. This appearance comes from the fact that dollars flow from the U.S. to abroad, and so are recorded as payments from America to a foreign country or countries. But this appearance is misleading. America, as such, doesn’t pay those returns to the restaurant’s foreign owners. Nor do any flesh-and-blood Americans pay those returns. Those returns, again, are new wealth created by the restaurant’s foreign owners; economically, those returns are paid to the restaurant’s foreign owners by the restaurant’s foreign owners.
But the international commercial accounts mask this economic reality. What appears in the commercial accounts as payments by America to foreign countries are no such thing. This accounting mistakes geography for economic reality. Untold confusion is unleashed by supposing that, just because these dollar-denominated returns are created in the U.S. and then sent abroad to foreigners, these dollar-denominated returns are necessarily paid by Americans to foreigners.
As Don says, the trade accounts commit a kind of category error: they categorize geographic location, a where, and treat it as a who, as if “nations” traded. But nations don’t trade, people trade. This confusion wouldn’t matter too much if the statistics stayed in the back pages of government reports. But they don’t. They land on the front page, they shape policy, and they frame negotiations. When a president claims that “we lost $500 billion” to “crazy trade” with China, he is reading the international accounts as a story about nations in competition. The accounting creates the narrative. the narrative creates the policy. Bad accounting leads to bad policy. We would, in fact, all be better off if the trade accounts simply disappeared.
More on Sir Thomas Gresham (from my email)
…Double-entry book-keeping – John and I believe, with some evidence, that he may well have been the person to bring double-entry book-keeping to the UK from the Low Countries. In turn an Italian invention of the 13th century…
Business exchanges rather than markets – Gresham certainly brought the idea of an exchange or bourse from Antwerp (in turn from Ghent) to England. It really was a radical idea. No phone directory, no advertising, no internet – we used to block of Cornhill with chains so merchants could meet at regular times in the mud and rain to establish ventures, principally voyages, and fund them. The Exchange became more and more populated as the Low Countries fought with Spain. People don’t bring money to a war zone (or a cybersecurity hazard). Thus, it was the vessel into which poured the extensive wealth of the Low Countries and turned London from an outback sheep town of 30,000 at the beginning of the 1500’s to a city of over 200,000 by 1600. Markets for cattle, sheep, produce, chickens, all existed – but a market for intangible things?
1st English Shopping Mall? – Gresham also brought the idea of a shopping mall to England. We have many examples of similar complexes and galleria from ancient times, but not in England. At the time it was the upper floor of his Exchange. The concept of shops not adhering to a physical locality – Bread Street, Milk Street, Boot street, etc. – was more radical than it sounds to modern ears. Amusing then to have England referred to in later centuries as “a nation of shop keepers”.
From Michael Mainelli, here is my original post on Gresham.
That was then, this is now
Around Hormuz, however, the Portuguese always had to be on guard. Many naturally protected sandy coves (khors in Arabic) practically invited “pirates.” The Nakhilu, or Banu Hula, were Sunni arabic speakers on the Gulf coast of Persia whose descendants still inhabit the Gulf coast of Iran. For decades they set up upocket ports in the many hidden bandars and byways of the mountainous shore and created an underground economy that rivaled Hormuz’s. These “pirates” were a major drain on Portuguese revenue, regularly attacking ships that paid the feed for the cartaz, and docked at Hormuz.
That is from Allen James Fromherz, The Center of the World: A Global History of the Persian Gulf from the Stone Age to the Present. From this same book I learned that Milton refers to the Straits in Paradise Lost, but under the name of Ormus:
High on a Throne of Royal State, which far
Outshone the wealth of Ormus and of Ind[ia],
Or where the gorgeous East with richest hand
Showrs on her Kings barbaric pearl and gold,
Satan exalted sat, by merit rais’d
To that bad eminence
Growth is getting harder to find, not ideas
Relatively flat US output growth versus rising numbers of US researchers is often interpreted as evidence that ideas are getting harder to find. We build a new 45-year panel tracking the universe of US firms’ patenting to investigate the micro underpinnings of this claim, separately examining the relationships between research inputs and ideas (patents) versus ideas and growth. We find that average patents per R&D input are increasing, the elasticity of patents to R&D inputs is flat or rising, and there is no systematic evidence of a secular decline in patenting after controlling for research inputs. We then document a positive, significant, and fairly steady relationship between firms’ growth in ideas (patents) and labor productivity. Average firm growth after controlling for idea growth, however, declines. Together, these results suggest that innovative efforts play a key role in sustaining growth that has not diminished over the last four decades.
Here is the paper by Teresa C. Fort, Nathan Goldschlag, Jack Liang, Peter K. Schott, and Nikolas Zolas.
Friday assorted links
1. Luis Garicano on the task is not the job. And jobs and the Jevons paradox.
2. The lived experience of aphantasia.
3. Shruti on delimitation in India.
5. Leibniz on symbolic computation, from the unpublished papers.
6. A History of Christian Political Economy, by Ballor and Matson.
7. Michael Tilson Thomas, RIP (NYT).
Which workers are using AI the most and best?
An FT poll of 4,000 workers in the US and UK shows adoption is heavily skewed towards the best-paid workers: more than 60 per cent use AI daily, compared with just 16 per cent of the lower earners.
Link here. Note also that the youngest workers are not those who use AI the most, rather it is workers in their 30s. Men in the workplace are using AI more than women are. A very good piece by Madhumita Murgia and John Burn-Murdoch.
What should I ask Luke Burgis?
Yes, I will be doing a Conversation with him. Excerpted (and edited) from a bio:
He is on the business faculty at Catholic University and has a background on both Wall Street and in the startup world, where he founded several companies. His first book, Wanting (2021), has been translated into 20+ languages and is selling more than copies than ever five years in. He is an expert on Rene Girard. His new book, The One and the Ninety-Nine, is out from St. Martin’s June 16 — a theory of how identity gets formed or deformed under conditions of technological social contagion. He has a third book with a major publisher (on “technology as soulcraft”) in the pipeline with a major publisher. He also lived in Italy and for a while was studying to be a priest. He remains a true Catholic, and is the founder and director of the Cluny Institute.
Here is Luke on Twitter. Here is Luke’s home page. So what should I ask him?
What I’ve been reading
1. Mason Currey, Making Art and Making a Living: Adventures in Funding a Creative Life. The best overall book I know on the different methods top artists have used to keep themselves going financially. It is perhaps more anecdotal and less theoretical than I would prefer, still a nice work.
2. Mangol Bayat, Mysticism and Dissent: Socioreligious Dissent in Qajar Iran. A very good, clear, and useful book on different dissident religiouis developments in Iran, leading up to the Bahai faith. Recommended, one of the best books I have found for grappling with the history of current Iran.
3. Lena Dunham, Famesick: A Memoir. Not exactly my thing, so I did not finish it. But it is pretty good, so if you are tempted give it a try.
4. Iain Pears, Parallel Lives: A Love Story from a Lost Continent. A delightful story/indirect memoir, telling the tale of the lives and marriage of Francis Haskell, the British art historian, and Larissa Salmina Haskell, a Russian woman who survived the siege of Leningrad as a girl. Pears had the full cooperation of Larissa, at an age where she doesn’t give a damn any more. This story truly comes to life, and that is helped by Pears’s background as a writer of very good fiction.
5. Lázár, by Nelio Biedermann. An excellent novel of ideas, in the style of earlier Continental literature, by a 23-year-old Swiss phenom. It is very good in German, I have not sampled the translation.
Thomas Gresham is underrated
While northern professions in 1600 did not require lengthy training in mathematics or science, there was popular interest in these topics. England’s first chair in mathematics was endowed by Thomas Gresham,61 who had founded London’s Royal Exchange and pledged the rents from that institution to fund seven professorships, who would not train student but would rather give two public lectures (in Latin and English) each week. As Gresham also gave chairs in astronomy and “physik,” this produced a cluster of scientifically minded individuals, who would later play an outsized role in the founding of the Royal Society. Robert Hooke was the Gresham Professor of Geometry, William Petty the Gresham Professor of Music, and Christopher Wren the Gresham Professor of Astronomy.
Perhaps because of Gresham’s public lectures, interest in mathematics grew. More professorships followed, including the mid-17th century Lucasian Chair in Mathematics (after William Lucas, member of parliament for Cambridge), for which Isaac Newton would be the second occupant (Clark, 1904). The popular interest in science also meant that teachers at urban universities could fill public lecture halls by teaching about chemistry, and even performing public chemistry experiments.
That is from a new NBER working paper by David M. Cutler and Edward L. Glaeser, “How Have Universities Survived for Nearly a Millennium?” Has any single individual funded three equally prestigious chairs or anything close to that?
Thursday assorted links
1. The rise of Chinese micro-dramas.
2. Niklas Luhmann.
3. Why Rome never industrialized (YouTube video).
4. One account of the genocidal impulse.
5. Organs on demand? We will see.
6. U.S. at the Venice Biennial (NYT).
7. “Argentina’s economy shrank 2.6 per cent in February compared to January, the largest monthly contraction since President Javier Milei took office in late 2023, as his inflation-busting economic programme weighed on major industries.” FT link here.