Milei update
Argentina President Javier Milei’s economic reform package won a key victory when the Senate approved his omnibus bill Thursday but additional income tax legislation was rejected following debate marred by violent protests that broke out earlier in front of congress.
After weeks of tense negotiations, senators passed Milei’s market-friendly plan that included privatizations and labor law changes when his vice president broke a 36-36 tie. Hours later, the income tax portion of a second bill failed in a vote that went section-by-section through the proposal.
Both the income tax proposal — which Milei’s supporters made changes to late on Wednesday to help smooth passage — and the omnibus economic bill still need to go back to the lower house.
Underscoring some of the political resistance to Milei’s proposals, protesters threw rocks, broken glass and Molotov cocktails Wednesday afternoon at riot police attempting to clear a nearby plaza with a water cannon and tear gas. Protesters also flipped and burned a car.
Despite the income tax setback, the economic changes approved in the first bill would mark Milei’s his biggest legislative achievement, one investors are likely to cheer.
Here is more from Bloomberg. Here are numerous ungated versions of the story.
Intel and its superloads
Intel’s new campus coming to New Albany, OH, is in heavy construction, and around 20 super loads are being ferried across Ohio’s roads by the Ohio Department of Transportation after arriving at a port of the Ohio River via barge. Four of these loads, including the one hitting the road now, weigh around 900,000 pounds — that’s 400 metric tons, or 76 elephants. The super loads were first planned for February but were delayed due to the immense planning workload. Large crowds are estimated to accumulate on the route, potentially slowing it even further.
Intel’s 916,000-pound shipment is a “cold box,” a self-standing air-processor structure that facilitates the cryogenic technology needed to fabricate semiconductors. The box is 23 feet tall, 20 feet wide, and 280 feet long, nearly the length of a football field. The immense scale of the cold box necessitates a transit process that moves at a “parade pace” of 5-10 miles per hour. Intel is taking over southern Ohio’s roads for the next several weeks and months as it builds its new Ohio One Campus, a $28 billion project to create a 1,000-acre campus with two chip factories and room for more. Calling it the new “Silicon Heartland,” the project will be the first leading-edge semiconductor fab in the American Midwest, and once operational, will get to work on the “Angstrom era” of Intel processes, 20A and beyond.
Here is the source, via Mathan Glezer.
My Conversation with Velina Tchakarova
Here is the audio, video, and transcript. Here is the episode summary:
Founder of the consultancy FACE, Velina is a geopolitical strategist guiding businesses and organizations to anticipate the outcomes of global conflicts, shifting alliances, and bleeding edge technologies on the world stage.
In a globe-trotting conversation, Tyler and Velina start in the Balkans and then head to Russia, China, North Korea, and finally circle back to Putin’s interest in the Baltics. She gives her take on whether the Balkan Wars still matter today, the future of Bulgarian nationalism, what predicts which Eastern European countries will remain closer to Russia, why China will not attack Taiwan, Putin’s next move after Ukraine, where a nuclear weapon is most likely to be used next, how she sources intel, her unique approach to scenario-planning, and more.
Here is one excerpt on a matter of great importance:
COWEN: Maybe we’ll come back to Bulgaria, but let me try some questions about the broader world. Why is it you think China will not attack Taiwan? They claim it as theirs, and arguably, in five to ten years, they’ll be able to neutralize our submarine advantage from the US with underwater drones and surveillance of our submarine presence. At that point, why don’t they just move on Taiwan and try to take it?
TCHAKAROVA: Well, I do understand that there is a lot of analysis coming out right now, especially on behalf of the military experts, not only in the United States but also in other parts of the world, pointing to this realistic scenario that we may see a military attack by China on Taiwan not later than 2027. And why 2027? Because it is being anticipated as the year when China will be able to catch up militarily with the United States.
I do not share this assessment. I just don’t see why China will have to take such a big risk in achieving something that it can achieve in a much smarter and more efficient way. What do I mean by that? I call this approach “death by a thousand cuts.” That would mean that China could spend a little bit longer in a slow but steady political, social, economic, and societal penetration of Taiwan. We could argue it’s the old Soviet playbook. It could be done in a more subtle way, using plausible deniability.
Taiwan is still the most successful democracy in the Indo-Pacific. That means, also, it is vulnerable to this kind of penetration, where you can practically use agents provocateurs on the ground. You can buy up a lot of institutional or individual players. You can start doing all this subversion process in a longer timeframe, but it could bring about bigger success than actually risking military intervention, which is not giving you, I would say, even a 50–50 chance of success.
The terrain of Taiwan, if we compare it with the most sophisticated war that’s going on right now, is much more difficult. You have a very, very limited window to attack. In the case of Taiwan, this window of opportunity is probably limited only to two periods in the whole year, which, of course, is also known by everyone in the region. That particularly means the defense of Taiwan. You have a window of opportunity in April and then in October, so you cannot attack at any time in the year.
It is a sophisticated military attack that cannot be conducted on the whole of the island. Even though China is catching up militarily right now, I think that the mindset of this Chinese leadership — the way the Chinese leadership is actually conducting strategy — does contradict such risky endeavor, again because time is on China’s side. China only needs to really prepare this sum of minor actions in a longer period of time. At least, this is what I would actually do as a strategist, which would promise a much better percentage of success than, like I said, an adventurous military attack.
Now, we may argue that under unanticipated circumstances for the political leadership — think of a situation where the political stability in China is shaken, where the Chinese leader, Xi Jinping, is somehow put into a corner to take a very, let’s say, ad hoc decision on the matter because of certain circles of the hawks, of the military hawks. Of course, we have this possibility as well. It could be a black swan event, something that has happened in China, and this makes him take this decision in order to draw the attention away from internal problems.
Foreign policy adventures are always gathering public support. It’s not 100 percent to be excluded, but in my scenario, I would actually point to, as I explained, this death-by-a-thousand-cuts approach rather than a military attack on Taiwan.
COWEN: Are we now in a world where the laws of war are basically obsolete?
It is worth repeating that issues of foreign policy are very much the most important issues. And here is Velina on Twitter.
A virtual rodent predicts the structure of neural activity across behaviors
Animals have exquisite control of their bodies, allowing them to perform a diverse range of behaviors. How such control is implemented by the brain, however, remains unclear. Advancing our understanding requires models that can relate principles of control to the structure of neural activity in behaving animals. To facilitate this, we built a ‘virtual rodent’, in which an artificial neural network actuates a biomechanically realistic model of the rat in a physics simulator. We used deep reinforcement learning to train the virtual agent to imitate the behavior of freely-moving rats, thus allowing us to compare neural activity recorded in real rats to the network activity of a virtual rodent mimicking their behavior. We found that neural activity in the sensorimotor striatum and motor cortex was better predicted by the virtual rodent’s network activity than by any features of the real rat’s movements, consistent with both regions implementing inverse dynamics. Furthermore, the network’s latent variability predicted the structure of neural variability across behaviors and afforded robustness in a way consistent with the minimal intervention principle of optimal feedback control. These results demonstrate how physical simulation of biomechanically realistic virtual animals can help interpret the structure of neural activity across behavior and relate it to theoretical principles of motor control.
Here is the new Nature article by Diego Aldarnado, et.al. Via @sebkrier.
Wednesday assorted links
1. Why are arena tours selling so poorly?
2. Daniel Frank’s favorite Scott Sumner posts.
4. Molly Cantillon, NOX, and their new AI assistant.
5. U.S. edition now out for Cynthia Haven edition of Rene Girard essay volume.
6. A new tunnel under the Hudson River? (NYT)
7. Long FT piece on whether South Africa can hold together.
8. CPI does well, bitcoin explodes. Worth a ponder, I have long argued bitcoin is a complement to USD, not a substitute.
On South African electricity (from the comments)
Does visiting South Africa make you more right-wing or more left-wing?
Perhaps “both” is the correct answer?
The right-wing tendencies are easiest to explain. South Africa is obviously much wealthier than the rest of sub-Saharan Africa, and of course Westerners play a larger role in its history and also in its present. You can put different glosses on that, but a variety of those paths lead to right-wing conclusions. The left-wing lessons are more novel to ponder, here are a few:
1. Following the removal of apartheid, a black middle class and upper class arose fairly quickly. That testifies to the importance of environment, opportunity, and circumstance. Of course most of the blacks in South Africa still lack adequate opportunity, most of all because of poor education and also sometimes because of poor location within the country, a legacy from segregated apartheid times. Overall, visiting the country causes one to upgrade the importance of opportunity, and to recognize that bad circumstances for talented people can continue for a very long time.
2. Post-apartheid economic performance has been disappointing, and economic inequalities have risen not declined. That suggests more capitalism can exacerbate economic inequality, even as political inequalities are eased.
3. Apartheid was enforced with a remarkably small number of police, per capita much less than most Western countries at the time. That might suggest a kind of Marxian and Foucauldian view that oppressive systems take on a force of their own, through norms and expectations, and are harder to dismantle than an analysis of simple coercion might indicate. The disappointments of post-apartheid South Africa hardly refute that suggestion, as those earlier norms and expectations are by no means entirely gone.
4. In the new, non-apartheid South Africa, sometimes class appears to be far more important than race per se. A certain number of blacks have been slotted into the upper classes, through their business successes, but the all-important role of class continues very much as before. Tthat point appears more Marxian than contemporary leftist, but Marx still is on the left.
5. You can see how much of South African history has been shaped by the roles of gold and diamonds in their economy. That again points in Marxian directions, more than today’s left. In South Africa, the means of production really mattered.
6. What is the ideal of color-blindedness supposed to mean there, after so many centuries of color mattering so much and in so many formal ways? They even still call one group “Coloureds.” Would it be so wrong to suspect SA color-blindedness advocates of somehow missing the point, and asking for something that is both illusory and unobtainable?
I am not sure how much I agree with all of these, only that they are ways I can imagine visiting South Africa and coming away more rather than less left-wing.
What else?
Tuesday assorted links
1. In a new study, male sperm counts are not dropping. It seems this has been a myth all along.
2. Brian Potter on AI data centers.
3. Do elephants have individual names? (NYT) And an NPR link.
4. Missouri restaurant bans women under 30 and men under 35.
5. Is Brazil’s growth rate rising?
6. Dan Klein’s views on politics and Trump and Republicans and fusionism. Co-authored with Zachary Yost.
Is Apple paying OpenAI, or vice versa?
I do not know. Am I wrong to think that in optimal contracts theory there should be payments going in both directions, as there is a dual agency relationship? Of course optimal contracts theory often fails.
Ben Thompson has a hypothesis (gated):
This sounds like a play to acquire users and mindshare, with the potential of upselling those users to a subscription, i.e. the exact same model that OpenAI has on their website and apps. Moreover, if this partnership entails Apple not paying, it also explains why OpenAI is the only option to start: Google, for example, probably wanted to be paid for Gemini, or Anthropic for Claude, and I can imagine (1) Apple holding the line on not paying, particularly if (2) OpenAI is making an aggressive move to build out its consumer business and be a durable brand and winner in the consumer space. In short, my updated current thinking is that both Apple and OpenAI are making the bet that very large language models are becoming increasingly commoditized, which means that Apple doesn’t have to pay to get access to one, and OpenAI sees scale and consumer mindshare as the best route to a sustainable business.
If I had to guess, I would think the main payment goes from Apple to OpenAI? We know Apple is very, very good at extracting revenue from customers. OpenAI, no matter how rapid its growth path over the next few years, simply cannot have a comparable record. There is thus one model where Apple pays for AI access rights, and later on then charges more for iPhones. You still will be able to buy cheaper phones without these services, if enough people demand that. OpenAI of course will be charging you as well, but only if you go over quota, as they face the “extra subscription fatigue issue” in a way that Apple does not.
Just a hypothesis. The fact that we do not know should tell you something about the limits of economic reasoning.
Muller on Capitalism
Jerry Z. Muller, author of the classic , is my favorite intellectual historian. Evidently I am not alone as the Journal of Applied Corporate Finance has brought together Five Essays by Muller, these are:
- The Neglected Moral Benefits of the Market
- Capitalism and Inequality
- Capitalism and Nationalism
- The Threat of Democracy to Capitalism
- Capitalism and the Jews Revisited
All are excellent and to the point. Here is one bit from The Neglected Benefits of the Market (no indent);
Adam Smith famously wrote that
It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages. Nobody but a beggar chooses to depend chiefly upon the benevolence of his fellow-citizens.
This passage is almost invariably cited as a statement of the potential social efficacy of self-interest. But notice the strength of its suggestion that dependence upon the benevolence of others is morally degrading and, hence, something to be avoided if possible. Thomas Carlyle—and later Marx and Engels—would deplore this system of mutual appeals to self-interest as evidence of the tyranny of “the cash nexus.” But the flip side of the cash nexus is, first of all, the freedom and self-determination that comes from having cash. Second, the fact that relations based on cash do not involve the total subordination of one individual to the will of another represents significant progress when set against the older, prevailing characteristic forms of human relations under slavery, serfdom, or indentured servitude. Nor does the use of cash involve the subordination of the individual to the will of the state and its officials, one of the defining characteristics of socialism. That is why Hegel, who certainly appreciated the role of the state, insisted that supporting oneself by earning a living is one of the most important ways in which men get a sense of themselves as autonomous individuals. What Hegel called “the ethic of bourgeois society,” includes a commitment to “the activity of supporting oneself through reason and industriousness.
Terence Tao on AI and mathematics
With formalization projects, what we’ve noticed is that you can collaborate with people who don’t understand the entire mathematics of the entire project, but they understand one tiny little piece. It’s like any modern device. No single person can build a computer on their own, mine all the metals and refine them, and then create the hardware and the software. We have all these specialists, and we have a big logistics supply chain, and eventually we can create a smartphone or whatever. Right now, in a mathematical collaboration, everyone has to know pretty much all the mathematics, and that is a stumbling block, as [Scholze] mentioned. But with these formalizations, it is possible to compartmentalize and contribute to a project only knowing a piece of it. I think also we should start formalizing textbooks. If a textbook is formalized, you can create these very interactive textbooks, where you could describe the proof of a result in a very high-level sense, assuming lots of knowledge. But if there are steps that you don’t understand, you can expand them and go into details—all the way down the axioms if you want to. No one does this right now for textbooks because it’s too much work. But if you’re already formalizing it, the computer can create these interactive textbooks for you. It will make it easier for a mathematician in one field to start contributing to another because you can precisely specify subtasks of a big task that don’t require understanding everything.
The entire interview is worth reading. As Adam Smith once said…
Why you should visit Cape Town, South Africa
First, it is one of the most beautiful cities and surrounding environs. I would put it on a par with Vancouver and Hong Kong and Wellington, New Zealand. Perhaps it is closest to Wellington.
Second, it is far safer than I was expecting. Throughout the week, I never once experienced angst, and that included walks at night and a visit to a township. Certainly there are dangerous places around, but you can do a whole, fulfilling trip without them. I felt safer than in NW Washington, DC.
Third, the flight wasn’t nearly as bad as I had thought. I am used to very long flights to Asia that leave at 11 a.m., wihch is suboptimal for me. The flights DC to Cape Town — both ways direct I might add — left early evening. So you read for a few hours, sleep for seven hours, and then read for a few hours again. Then you arrive. I’ve experienced more painful flights going to the West Coast from Dulles. It never felt like 15 hours, nor the 14 hours coming back.
Fourth, it is inexpensive.
Fifth, the people are very friendly.
Sixth, during my trip the weather was excellent. Some rain, but mostly during my other commitments. It was in the 65 to 70 degree range, and sunny, most of the time I was going around.
I don’t have much to add to the tips in the guidebooks, and from MR readers. But definitely take a day tour by car down to the bottom of the Cape, and see where the Indian and Atlantic Oceans meet. Along the way, without much trying, you likely will see ostriches, baboons, and many penguins, in addition to various exotic African birds.
South Africa is one of those countries that has no other country like it. That means you can learn more by going there. That means you should go there. Q.E.D.
South Africa and its history
Almost three years earlier, a sombre Paul Kruger had warned that Britain would find conquering the Boer states no easy matter. In the sense that they were certainly not gained on the cheap, this was an accurate judgment. By the end of the war, the British had been obliged to mobilise almost 450 000 imperial solders to defeat Boer forces, which had been able to field roughly 80 000 combatants at most. Their extended resistance turned London’s South African campaign into the largest and most costly war fought by the British between 1815 and 1914. This was a colonial war which Britain’s Treasury estimated in September 1899 would require the despatch of at most 75 000 troops and funding of about £10 million for a campaign of two to three months. By the time the conflict finally ended, that cost had risen to £217 million. What this balance sheet reflected was the enormous military investment that the British Empire required to defeat two of the world’s smallest agrarian states.
That is from New History of South Africa, by Hermann Giliomee, Bernard Mbenga, and Bill Nasson, a very excellent book. I found it to be one of the best single-volume histories of any country I have read. The other South Africa book I found especially helpful was Understanding South Africa, by Carien du Plessis and Martin Plaut. One of the best things about travel is you understand a country — through books — much better than before you went there. Everything is more vivid, and you retain much more of it.
Monday assorted links
1. The economics department at Genova has an electric diesel submarine.
2. “In other words, many weird cosmic topologies are still entirely consistent with the observed data.”
3. A scenario for AGI in three years?
4. Arnold Kling’s favorite business books.
5. The social value of better hurricane forecasting is high.
6. The European Parliament elections in perspective.
7. Gideon Rachmann in the FT on South Africa.
Many people seem to like the new movie Hit Man, but for me the moral dissonance was too great and the plot line I eventually found implausible.
AI and Truth Evasion
A good insight from Eliot Higgins, the head of the intelligence service Bellingcat.
When a lot of people think about AI, they think, “Oh, it’s going to fool people into believing stuff that’s not true.” But what it’s really doing is giving people permission to not believe stuff that is true. Because they can say, “Oh, that’s an AI-generated image. AI can generate anything now: video, audio, the entire war zone re-created.” They will use it as an excuse.
From an extensive interview in Wired.
Addendum: A case in point.
That is from Marcel. Two other points are neglected when it comes to South Africa and electricity. First, as of March 2024 partial deregulation is in the offing (Bloomberg):
More here. Second, solar power is likely to save South Africa in a big way. And decentralized rooftop solar has doubled since 2022.
Power generation is often cited as a major reason for thinking South Africa is on the verge of collapse. But the entire story — its most recent installments included — is actually a reason to be (somewhat) optimistic about the place. It is not just that electricity is important per se, but also this example shows South Africa can move toward solving a problem through a mix of policy and technology.