Friday assorted links
1. Redux of my 2009 post on my preferred exile. Mexico City now rates much higher, and Germany lower. Madrid would be a serious choice, in the top few. Even Rome falls under consideration. And I want more money for the exile too, which price index shall we use?
2. “In the past three months of the 119th Congress, fully 25% of documents in the Congressional Record are AI-generated.” Note that AI-generated text is about 30% more “progressive,” though that is showing up in the resolutions rather than substantive legislation.
3. The labor market consequences of rapid sectoral shifts.
4. Right now LLMs are “too altruistic” in the Ultimatum game.
5. Companies that should exist but don’t?
6. Piano bars and music popularity. The market test speaks.
7. An Islamic perspective on Sirat. And a very different view on the film.
Alternatives to 911
Almost a quarter-billion calls are placed to 911 each year in the United States. A large share of them involve social problems, not crimes or emergencies—yet police are dispatched in response. This review traces how the 911 emergency system’s institutional design shapes demand for police, who is excluded from or ill served by this system, and what alternatives exist, including nonemergency lines (with police response), government hotlines (211, 311, 988), civilian crisis teams, and community-based resources. Among the universe of municipal police departments with at least 100 sworn officers in 2020, covering 107 million US residents, police have absorbed broad social service functions, with the availability of formal alternatives restricted to the largest cities. The evidence suggests that the primacy of police reflects institutional reproduction more than public need. I propose priorities for future research.
That is from a new NBER working paper by Bocar A. Ba.
Studying with Ludwig Lachmann
Since I am in South Africa, I am reminded of my time studying with Ludwig Lachmann, the South African economist from University of the Witwatersrand. I was seventeen, and Lachmann teaching a graduate seminar at New York University. Someone (Richard Ebeling maybe?) had told me he was interesting, so I wanted to sit in on the seminar. I showed up, introduced myself to Lachmann, and asked if I could listen to the lectures. I obviously did not belong, but he was very gracious and said yes of course. He wore a suit and tie, had a very Old World manner, and he had been a Jewish refugee from Germany. He was 73 or so at the time, this was 1979.
His manner of speaking was very distinctive. Of course I now recognize the South African accent, but there is more to it than that.
Lachmann was best known for his connections to the Austrian School, as he was visiting at the NYU Austrian program at the time, under the aegis of Israel Kirzner. Nonetheless Austrian economics was not what I learned in the seminar.
On the first day, I heard plenty about Sraffa and Garegnani, and all that was new (and fascinating to me). Lachmann had studied with Werner Sombart, so I learned about the German historical school as well.
Lachmann also was my first teacher who made sense of Keynes for me, moving me away from obsessions with the hydraulic IS-LM interpretations of the General Theory. He flirted with views of cost-based pricing, brought me further into the kaleidic world of G.L.S. Shackle, and he insisted that a market economy had no overall tendency toward the constellation of a general equilibrium of prices and quantities. (He did believe that most though not all individual markets tended to equilibrate.) He inveighed against W.H. Hutt’s interpretation of Say’s Law, of course some of you here will know that Hutt also was South African. I kept on trying to read Hutt, to see if I could defend him against Lachmann’s critiques. I also imbibed Hutt’s economic critique of apartheid.
Lachmann did not talk about South Africa, other than to mention how long the journey to New York was. You may know that Israel Kirzner, another early mentor of mine, had South African roots as well. He also did not talk about South Africa.
“South African economics,” if you wish to call it that, played a significant role in my early intellectual development.
To this day, when I think about the economics of AI, and many other matters, Lachmann’s book Capital and its Structure is one of my go-to inspirations.
And I am still grateful to Lachmann for letting “a kid” sit in on his class. I paid avid attention.
Liberalism.org
…on March 12 we’ll be launching Liberalism.org, a new project from IHS [Institute for Humane Studies]. We’re aiming to build something akin to a modern-day coffee house of the liberal tradition—a digital gathering place where today’s most innovative liberal thinkers can weigh tradeoffs, think across differences, and apply liberal values to the challenges of today and the future.
The idea is to create a space that is serious but accessible—a home for exploring political, economic, intellectual, and civic freedom as a coherent and evolving tradition. We’re hoping it will serve as both an outlet for the ideas and a public-facing resource for those who care about the future of liberalism in its broad, classical sense.
Thursday assorted links
Why is the USDA Involved in Housing?!
In yesterday’s post, The 21st Century ROAD to Housing Act, I wrote that Trump’s Executive Order “cuts off institutional home investors from FHA insurance, VA guarantees and USDA backing…”. The USDA is of course the United States Department of Agriculture. In the comments, Hazel Meade writes:
USDA? Wait, what????
Why is the USDA in any way involved in housing financing?
Are we humanly capable of organizing anything in a rational way?
It’s a good question. The answer is a great illustration of the March of Dimes syndrome. The USDA got involved with housing in the late 1940s with the Farmers Home Administration. The original rationale was to support farmers, farm workers and agricultural communities with housing assistance on the theory that housing was needed for farming and the purpose of the USDA was to improve farming. Not great economic reasoning but I’ll let it pass.
Well U.S. farm productivity roughly tripled between 1948 and the 1990s as family farms became technologically sophisticated big businesses. So was the program ended? Of course not. Over time the program subtly shifted from farmers to “rural communities”–the shift happened over decades although it was officially recognized in 1994 when the Farmers Home Administration was renamed the Rural Housing Service. Today rural essentially means low population density which no longer has any strong connection to agriculture.
So that’s the story of how the US Department of Agriculture came to run a roughly $10 billion annual housing program for non-farmers in non-agricultural communities. And how does it do this? By supporting no-money-down direct lending and a 90 percent guarantee to approved private lenders. Lovely.
It’s a small program in the national totals, but an amusing example of the US government robbing Peter to pay Paul and then forgetting why Paul needed the money in the first place.
The alternate book universe that is South Africa
One of the things I like best about South Africa is how quickly one enters another and very different intellectual world. Walk into a good used book shop, such as Clarke’s in Cape Town, and you find a slew of quality history books and biographies you otherwise would not have heard of. Buy them and read them and be transported. So many of them exist apart from the usual dialogues. For instance, I recently bought
Nowhere else is a used book store more interesting, at least from an English-language perspective.
On the future of war
Murphy: What do you think we need to do to avoid major conflict over the next 25 years? Or do you think it can be avoided?
Cowen: I just think there’ll be more festering conflicts. Consider the difference between World War One and World War Two. World War two is very decisively settled. That’s quite rare in history. And you had a clear, small number of victors that largely agreed. And US & UK set things up. That didn’t happen after World War One.
Yeah, there was a League of Nations that didn’t work. It collapsed again. Future conflicts will be more like World War One than World War Two. Yeah, there’s too many nuclear weapons out there, for one thing. Are we really going to decisively defeat Russia in anything, ever? Who knows? But I wouldn’t count on it.
I’m very struck by this recent conflict between Thailand and Cambodia, which is a nothing burger, but I think people are making a mistake by ignoring it. What it’s showing us is that two countries can find it worthwhile to conduct a nothing burger war every now and then a few weeks, and it’s never really over.
It never really escalates. It just goes on and I think we’ll just see more of that. East Africa feels quite dangerous at the moment.
Murphy: I mean, Azerbaijan.
Cowen: Things like that. And they’ll just multiply and not quite. You know, some of them will be settled. But as a whole, they won’t be settled, and they won’t give birth to, like, the new UN, the new Bretton Woods, the new whatever. The A’s will build their own institutions. Let’s wish them luck.
That was recorded several months ago with Nebular, here are the links:
We’ve just published the video on YouTube, X, Spotify, and Apple Podcasts. We also published some extended show notes and the transcript on Substack.
On the meaning of Sirāt (with plenty of spoilers)
Sebastian Geoffroy:
I left the film perplexed, but after some thought I have an interpretation.
The film is a recognition that for most of the West, the story is about the individual, their actions, their decisions. However – for many in the non-Western world – the story is about things outside of their agency. The characters discover this in their journey, and the lack of character development is intentional – this is not about them, it is about the context of their life, where much is simply out of their control. The minefield is a pinnacle of this; who lives, who dies – totally random. Heck, even ending up in the minefield was random.
The ending scene is alluding to this – showing the cast amongst migrants, alluding to their recognition that they too have entered the stochastic nature of life. This probably leads to some frustration among Western viewers; they are looking for the individual story. Instead, this is a film about context, and those things out of our control.
As you like to say, context is that which is scarce.
Interested in your thoughts.
I would add two points. First, I think the film is suggesting that humanity as a whole is making the same mistakes these characters are. Pointless quests (the daughter is not really missing), recklessness, plans devoid of meaning, and excess attachment to various drugs. WWIII is going on in the background, on the radio, and in this film the group ends up with the African goat herders, not doing better than they are and also difficult to distinguish from them at first.
Second, many points in the plot parallel episodes from the Bible and the Quran, except the characters do not experience them with meaning. Abraham offers to sacrifice his son for God, but here the father loses his son for no reason whatsoever. There are hallucinations in the desert, forty days and forty nights of wandering, Job-like episodes, and more. Instead of suicide bombers, we have people who blow up randomly for no good reason at all.
Again, this movie would make little sense over streaming. Here is my earlier review. Here is commentary from the director in Spanish, I have not yet listened. Here is a short post on the holiness of the movie.
Wednesday assorted links
The 21st Century ROAD to Housing Act
The 21st Century ROAD to Housing Act appears likely to pass the Senate. The bill contains some genuinely good ideas alongside some very popular—but bonkers ideas.
Let’s start with the good ideas.
The bill would streamline NEPA review for federally supported housing, primarily by expanding categorical exclusions. Federal environmental review does impose real costs and delays on housing construction, so reducing unnecessary review is a step in the right direction. The gains will probably be modest—most housing regulation occurs at the state and local level—but removing friction is good.
The bill would also deregulate manufactured housing by eliminating the permanent chassis requirement and creating a uniform national construction and safety standard. The United States once built far more factory-produced housing; in the early 1970s, by some accounts a majority of new homes were factory-built (mobile or modular). Long-run productivity growth in housing almost certainly requires greater use of factory construction. Land-use regulation remains the dominant constraint on supply, but enabling scalable manufacturing is still welcome.
Another interesting provision involves Community Development Block Grants (CDBG). The bill allows CDBG funds to be used for building new housing rather than being largely restricted to rehabilitation of existing housing. More federal spending is not automatically appealing, but the bill adds an unusual incentive mechanism.
The bill creates a tournament for CDBG allocations. Localities that exceed the median housing growth improvement rate among eligible CDBG recipients receive bonus funding. Those below the median face a 10 percent reduction. The key feature is that the penalties fund the bonuses, so the system reallocates money rather than expanding spending.
This is a clever design. It creates competition among localities and benchmarks them against peers rather than against a fixed national target. In effect, the program rewards relative improvement rather than absolute performance—a classic tournament structure. (See Modern Principles for an introduction to tournament theory!).
Ok, now for the popular but bonkers ideas. Section 901 (“Homes are for People, Not Corporations”) restricts the purchase of new single-family homes by large institutional investors. Elizabeth Warren is a sponsor of the bill but this section was driven almost entirely by President Trump. Trump passed an Executive Order, Stopping Wall Street from Competing With Main Street Home Buyers, that cuts off institutional home investors from FHA insurance, VA guarantees, USDA backing, Fannie/Freddie securitization and so forth. The bill goes further by imposing a seven-year mandatory divestiture rule, forcing institutional investors to convert rental homes to owner-occupied units after seven years.
No one objects to institutional investors owning apartment buildings. But when the same investors own single-family homes, it breaks people’s brains. Consider how strange the logic sounds if applied elsewhere:
…a growing share of apartments, often concentrated in certain communities, have been purchased by large Wall Street investors, crowding out families seeking to buy condominiums.
Apartments are fine, hotels are fine, but somehow a corporation owning a single family home is un-American. In fact, the US could do with more rental housing of all kinds! Why take the risk of owning when you can rent? Rental housing improves worker mobility. When foreclosures surged after 2008 and traditional buyers disappeared, institutional investors stepped in and absorbed distressed supply — helping stabilize markets. Who plays that role next time?
Institutional investors own only a tiny number of homes, so even if this were a good idea it wouldn’t be effective. But it’s not a good idea, it’s just rage bait driven by Warren/Trump anti-corporate rhetoric.
What does “Homes are for People, Not Corporations” even mean?–this is a slogan for the Idiocracy era. “Food is for People, Not Corporations,” so we should ban Perdue Farms and McDonald’s?
The Girl Scout culture that is New Jersey
A New Jersey Girl Scout troop has taken cookie sales to new heights, setting up shop right outside a popular cannabis dispensary.
A South Jersey-based troop recently teamed up with Daylite Dispensary in Mount Laurel to sell their beloved cookies at the cannabis shop this cookie season.
“You use cannabis, you get the munchies,” Daylite Dispensary owner Steve Cassidy told NJ.com “There’s a connection between snacks and cannabis and the fact that we don’t have to pretend that doesn’t exist anymore is really awesome.”
Daylite became Mount Laurel’s first dispensary when it opened in 2023. Cassidy said the idea was proposed back in 2024, but it was turned down by Girl Scouts of Central & Southern New Jersey, the Girl Scout council that oversees troops in the region.
When the idea reemerged ahead of this year’s cookie season, the troop was allowed to sell cookies at Daylite on a trial basis, according to Cassidy.
Here is the full story, via someone else.
Latin America and the Great Trade realignment
Citi sees Latin America as one of the main winners of the “great trade realignment”
A new Citi report positions Latin America as one of the main winners of what it calls the “great trade realignment”, as global supply chains shift toward a more multipolar structure driven by tariff volatility, AI adoption and nearshoring trends.
Trade flows from Latin America to ASEAN countries surged 82% between 2019 and 2024, while exports from China to the region grew 59% over the same period.
Latin America’s exports to North America also rose 43% in the same period.
Citi highlights the region’s growing role as a vital supplier of critical minerals to Asia’s electronics industry, an agricultural alternative to the United States for products like soybeans, and an increasingly attractive destination for foreign direct investment, which grew 12% in the first half of 2025 against a negative trend in other developed economies.
Here is the link.
The forthcoming Fuchsia Dunlop book
The Five Tastes: Delicious Recipes for Chinese Flavor, due out this fall. Via Joe Powers in the MR comments section. Hers are the very best Chinese cookbooks and they are also wonderful books more generally. She has been a CWT guest three times now. Let us hope a fourth episode is in order…
How frequent are price bubbles?
We examine the historical frequency of stock market booms, crashes, and bubbles in the United States from 1792 to 2024 using aggregate market data and industry-level portfolios. We define a bubble as a large boom followed by a crash that reverses the market’s prior gains. Bubbles are extremely rare. We extend the industry-level analysis of Greenwood, Shleifer, and You (2019) through 2024 and replicate their findings out of sample using Cowles Commission industry data from 1871 to 1938. Booms do not reliably predict crashes, but they do predict higher subsequent volatility, increasing the likelihood of both large gains and large losses.
That is from a new NBER working paper by William N. Goetzmann, Otto Manninen, and James Tyler.