Thursday assorted links
2. These South Korean Catholic priests should be bloggers.
3. Zero-based regulation by James Broughel. And from Alex Adams.
4. RLHF propaganda posters, funny stuff.
5. Scientific breakthroughs of 2024.
6. Weather forecasting breakthroughs with AI.
7. Scott Sumner on Cowen and Tabarrok on money. The key I think is to have a theory that explains why nominal variables sometimes forecast very well, and other times not well at all — this is very hard! I read Scott as significantly overrating the forecasting power of the nominal in the data.
Before AI replaces you, it will improve you, Philippines edition
Bahala says each of his calls at Concentrix is monitored by an artificial intelligence (AI) program that checks his performance. He says his volume of calls has increased under the AI’s watch. At his previous call center job, without an AI program, he answered at most 30 calls per eight-hour shift. Now, he gets through that many before lunchtime. He gets help from an AI “co-pilot,” an assistant that pulls up caller information and makes suggestions in real time.
“The co-pilot is helpful,” he says. “But I have to please the AI. The average handling time for each call is 5 to 7 minutes. I can’t go beyond that.”
Here is more from Michael Beltran, via Fred Smalkin.
Using AI to analyze changes in pedestrian traffic
That is the topic of my latest Bloomberg column, here is one bit:
Fortunately, there is new research. We have entered the age where innovative methods of measurement, such as computer vision and deep learning, can reveal how American life has changed.
Researchers at the National Bureau of Economic Research compiled footage of four urban public spaces, two in New York and one each in Philadelphia and Boston, from 1979-1980 and again in 2008-2010. These snapshots of American life, roughly 30 years apart, reveal how changes in work and culture might have shaped the way people move and interact on the street.
The videos capture people circulating in two busy Manhattan locations, in Bryant Park in midtown and outside the Metropolitan Museum of Art on the Upper East Side; around Boston’s Downtown Crossing shopping district; and on Chestnut Street in downtown Philadelphia. One piece of good news is that at least when it comes to our street behavior, we don’t seem to have become more solitary. From 1980 to 2010 there was hardly any change in the share of pedestrians walking alone, rising from 67% to 68%.
A bigger change is that average walking speed rose by 15%. So the pace of American life has accelerated, at least in public spaces in the Northeast. Most economists would predict such a result, since the growth in wages has increased the opportunity cost of just walking around. Better to have a quick stroll and get back to your work desk.
The biggest change in behavior was that lingering fell dramatically. The amount of time spent just hanging out dropped by about half across the measured locations. Note that this was seen in places where crime rates have fallen, so this trend was unlikely to have resulted from fear of being mugged. Instead, Americans just don’t use public spaces as they used to. These places now tend to be for moving through, to get somewhere, rather than for enjoying life or hoping to meet other people. There was especially a shift at Boston’s Downtown Crossing. In 1980, 54% of the people there were lingering, whereas by 2010 that had fallen to 14%.
Consistent with this observation, the number of public encounters also fell. You might be no less likely to set off with another person in tow, but you won’t meet up with others as often while you are underway. The notion of downtown as a “public square,” rife with spontaneous or planned encounters, is not what it used to be.
I prefer the new arrangements, but of course not everybody does. The researchers are
China markets in everything
This is very interesting, and I think a world first: a local government in China has just sold its sky, literally. This is the government of Pingyin County, Jinan, Shandong Province who sold for 924 million yuan (approximately $130 million) a 30-year concession to operate and maintain its low-altitude economic projects to a company called Shandong Jinyu General Aviation Co., Ltd. The “low-altitude economy” is a big trend in China at the moment. XPeng, one of China’s leading EV manufacturers, recently released a low-altitude flying car for instance. Drone deliveries are becoming increasingly common in Chinese cities, and various regions are actively developing low-altitude transportation networks. Shanghai, for instance, plans to establish 400 low-altitude flight routes by 2027. But this is the first time a local government has monetized its low-altitude airspace…
Here is more from Arnaud Bertrand. Via Jesper.
Wednesday assorted links
2. These names are not amongst the nine billion names of God.
3. Russ Roberts podcast with the translator of Life and Fate.
4. The Baby Money Index. Qatar is number three.
5. Lessons from working in an art gallery, excellent post recommended.
Info Finance has a Future!
Info finance is Vitalik Buterin’s term for combining things like prediction markets and news. Indeed, a prediction market like Polymarket is “a betting site for the participants and a news site for everyone else.”
Here’s an incredible instantiation of the idea from Packy McCormick. As I understand it, betting odds are drawn from Polymarket, context is provided by Perplexity and Grok, a script is written by ChatGPT and read by an AI using Packy’s voice and a video is produced by combining with some simple visuals. All automated.
What’s really impressive, however, is that it works. I learned something from the final product. I can see reading this like a newspaper.
Info finance has a future!
Addendum: See also my in-depth a16z crypto podcast (Apple, Spotify) talking with Kominers and Chokshi for more.
Nicholas Bagley on DOGE
A unilateral pause won’t be as helpful as Musk and Ramaswamy seem to think. Many businesses, especially big businesses, have to certify their legal compliance to government agencies—most notably via financial reports to the Securities and Exchange Commission, where false certifications can trigger criminal penalties under Sarbanes-Oxley. Few will feel comfortable ignoring rules that are still on the books just because DOGE tells them they might someday be rescinded.
What’s more, you need smart bureaucrats to make sure that rescissions hold up in court. Under settled law, established way back in the Reagan administration, “an agency changing its course by rescinding a rule is obligated to supply a reasoned analysis for the change.” Compiling that analysis requires technical skills that agency bureaucrats will have and that DOGE will lack. Slashing the federal workforce will thus work at cross-purposes to deregulation.
Here is the whole piece, excellent analysis.
The end of oil?
It is now plausible to envision scenarios in which global demand for crude oil falls to essentially zero by the end of this century, driven by improvements in clean energy technologies, adoption of stringent climate policies, or both. This paper asks what such a demand decline, when anticipated, might mean for global oil supply. One possibility is the well-known “green paradox”: because oil is an exhaustible resource, producers may accelerate near-term extraction in order to beat the demand decline. This reaction would increase near-term CO2 emissions and could possibly even lead the total present value of climate damages to be greater than if demand had not declined at all. However, because oil extraction requires potentially long-lived investments in wells and other infrastructure, the opposite may occur: an anticipated demand decline reduces producers’ investment rates, decreasing near-term oil production and CO2 emissions. To evaluate whether this disinvestment effect outweighs the green paradox, or vice-versa, I develop a tractable model of global oil supply that incorporates both effects, while also capturing industry features such as heterogeneous producers, exercise of market power by low-cost OPEC producers, and marginal drilling costs that increase with the rate of drilling. I find that for model inputs with the strongest empirical support, the disinvestment effect outweighs the traditional green paradox. In order for anticipation effects on net to substantially increase cumulative global oil extraction, I find that industry investments must have short time horizons, and that producers must have discount rates that are comparable to U.S. treasury bill rates.
That is from a new NBER working paper by Ryan Kellogg.
Interview with Jonathan Levin, economist and Stanford president
Stanford Review: …Several freshmen I have talked to have bemoaned their mandatory COLLEGE classes that are contract graded, meaning that students will receive an A if their work is turned in on time regardless of quality. One frosh even told me that all of her first quarter classes are contract graded. How does this set students up for success at Stanford and beyond?
President Levin: So the COLLEGE curriculum, that’s part of the design—and of course, it’s a new course. So many aspects of COLLEGE are an experiment. We’re learning. The faculty who teach it are learning about the best design for that class, what the syllabus should look like, what’s the best way to manage discussion, what’s the teaching model, what’s the grading model. And that’s something that the Faculty Senate discussed maybe 18 months ago or last year, the grading model, and at the time, they presented some evidence suggesting that it seemed to have been a positive experience.
Here is the link, Julia Steinberg did a great job. Interesting throughout. Jon you are an awesome economist, but you have to have much better answers than these, even by the standards of bureaucratic blah blah blah. We are looking to you to save Stanford, and bring a modicum of leadership and common sense, after the previous president was revealed to be a fraudster, among his other drawbacks. But more is needed than simply trying not to answer any of the questions!
Tuesday assorted links
1. Are humble scientists trusted more?
2. I thought this was hilarious (you won’t), that just shows how far gone I am.
3. The labor market regulatory culture that is Belgium.
5. Without weight loss drugs, Danish gdp growth would be about zero.
Marginal Revolution Podcast–The New Monetary Economics!
Today on the MR Podcast Tyler and I discuss the “New Monetary Economics”. Here’s the opening
TABARROK: Today we’re going to be talking about the new monetary economics. Now, perhaps the first thing to say is that it’s not new anymore. The new monetary economics refers to a set of claims and ideas about monetary economics from the 1980s, more or less, coming from people mostly in finance, like Fischer Black and Eugene Fama, and making some very bold claims that macroeconomics had gotten some things completely wrong. You and Randall Kroszner also wrote a great book, Explorations in the New Monetary Economics, and that appeared in 1994. [Someone should reprint this book!, AT]
Now, most people thought that the ideas of the new monetary economics were simply crazy. Black and Fama, for example, they argued that the Fed was essentially impotent; that it couldn’t control the money supply or even the price level, let alone the economy, at least in some circumstances.
COWEN: Fischer Black started the new monetary economics with a 1970 article, very early. Not in a standard journal, of course. Black argued that the Fed doesn’t matter. The supply of money and the price level were not closely related in any obvious way. There’s a well-known story where Fischer Black showed up at Chicago to present a paper at Milton Friedman’s monetary seminar. Friedman started off by introducing Black as, “Fischer Black’s paper is totally wrong. He’s going to present it to us. We have two hours to figure out why.”
At the same time, people like Paul Samuelson, Robert Solow, the MIT crowd, they also just said Black is totally wrong. He’s a genius on finance and options pricing, but when it comes to monetary economics, just forget about it. Dismiss him. They even said this in print at times.
The ideas of the NME remain as counterintuitive as ever–is it really possible that the Fed has no power over inflation let alone the real economy??? Yet the ideas seem increasingly relevant to modern, sophisticated, highly liquid financial markets and monetary systems including crypto. If anything, the NME has become harder to dismiss, as the world theorized by its proponents in the 1970s and 1980s now mirrors today’s reality far more than their own. While the NME may be now be old, the ideas remain as challenging and even as inspiring as ever.
I am not sure that either Tyler or I have a solid conclusion on the NME but we invite you to join us on this exploration.
Subscribe now to take a small step toward a much better world: Apple Podcasts | Spotify | YouTube.
The Nicholas Fox Weber biography of Mondrian
Definitive, this is by far the best biography of Mondrian we have or are likely to get. I am a longstanding Mondrian fan, and have read much about him, but learned new things on virtually every page. The book is also fun, here is one excerpt:
Initially Mondrian did not respond at all [to a question about surrealism]. There was prolonged silence following Breton’s inquiry. Then, in the void, Duchamp added: “What, for example, do you think of the work of our friend Yves Tanguy here?” Mondrian’s reply, after more thoughtful chin stroking, came firmly, but calmly: “I enjoy conversational games as much as you do, but I shall not indulge in them. I have seen Tanguy’s exhibition at Pierre Matisse several times and found it very beautiful but very puzzling. Yves’ work is much too Abstract for me.”
You can order the book here. How is it that Weber — the author of numerous fine books on modernist art — does not have a Wikipedia page of his own?
Best movies of 2024
Poor Things
The Delinquents [Los Delincuentes], from Argentina, tragicomedy
The Teacher’s Lounge
All of Us Strangers
Anselm
The Zone of Interest
You Can Call Me Bill
Lynch/Oz
Miracle Worker, that is a very old Arthur Penn movie, about Helen Keller and Anne Sullivan. Interesting throughout, and some parts were stupendously good, especially when dialogue was absent and Helen and Anne are simply fighting.
Civil War, and much more here.
About Dry Grasses
Do Not Expect Too Much from the End of the World
Twisters
Blitz
All We Imagine as Light
A Real Pain
Green Border
So overall a pretty good year, even though it never felt like it on any single weekend. I will post on anything notable between now and year’s end, noting that I simply treat those Dec.31 Academy Award releases as 2025 movies.
Japan fact of the day
The most dismal stockpickers in the cabinet included the minister for health, labour and welfare, the arm of government ultimately responsible for the $1.45tn Government Pension Investment Fund, the world’s largest pool of retirement savings.
Here is more from the FT, via the excellent Samir Varma.
Monday assorted links
1. I am usually loathe to turn MR space over to negative attacks on others, but every now and then I feel there is a real contribution to be made. I have been saying for years that Michael Pettis flat out does not understand international economics, and yet somehow he is treated as an authority in the serious financial press. Here is his recent tweet storm. It is wrong.
2. Kiwi update.
3. “ID rules all the way down”?