A pessimistic account of the Milei reforms

by  Tyler Cowen in

Eduardo Costantini, a billionaire property developer, supports Milei’s plans but describes his handling of Congress as an “unforced error”. “The legislative strategy he had clearly didn’t work,” he says. “He came away from this first round practically empty-handed.”

Nicolás Pino, head of agribusiness lobby La Sociedad Rural Argentina, says cutting spending without also delivering deep reforms of Argentina’s state in the legislature is “no solution”. He urges the president to “lower tensions” with Congress and try again. “He will find many people ready to help him.”

But Milei appears to think otherwise. People who deal with the government say the president is now more dependent than ever on a small inner circle of true believers and his army of social media followers, to whom he devotes more than two hours a day online. His closest advisers include his sister Karina, who used to sell specially decorated cakes on Instagram and is now the presidential chief of staff, and Santiago Caputo, a 38-year-old political consultant and social media guru whose father is a cousin of Luis Caputo, the former Wall Street trader now serving as finance minister…

Some question Milei’s economic results too. Eduardo Levy Yeyati, an economist and professor at Torcuato di Tella university in Buenos Aires, believes the much-vaunted fiscal surplus in January benefited from accounting tricks such as shuffling government payments around. “The surplus is unsustainable,” he says. “It can only be sustained if the government passes tax measures.”

I am not saying this is true, as I genuinely do not know the latest.  But it is the pessimistic account, if you are looking to catch a dose of that.  Here is more from Michael Stott and Ciara Nugent at the FT.  You will note that the (black market) peso is up, but only modestly.

The Ability to Concentrate is Increasing?!

by  Alex Tabarrok in

Distraction is everywhere. As I write this post, I pause to check twitter. Phones are omnipresent and demand our attention. Dopamine hits rule. Yet, despite the potential for greater distraction, a large study finds that on a standardized test, the ability to concentrate is up (modestly) for adults.

In the present cross-temporal meta-analysis, we investigate potential test score changes for attention as assessed by the d2 Test of attention. Based on data from 287 independent samples (N = 21,291) from 32 countries over a timespan of 31 years (1990–2021) we found evidence for moderate generational test score gains in concentration performance in adults, but not [statistically significantly, AT] children.

And while I wouldn’t put much weight on these results, since they are correlational and by country only, do note:

Internet use predicted concentration performance positively, yielding small effects for children but no meaningful effects for adults. This seems to be in contrast with findings that indicate adverse effects of digitalization in general, and video games, media multitasking, as well as overall increased screen time on attention capabilities in particular….

Of course, this is measuring attention on a test where presumably the phones have been taken away! In other words, the environment may have made deep work more difficult but we still retain the ability to concentrate in a distraction-free environment. Or, perhaps in the past, people just daydreamed more instead of checking their phones.

But does he care about on-time performance?

by  Tyler Cowen in

While the 17-year-old does indeed live on trains, he does so entirely legally. And with a surprising amount of comfort.

Lasse travels 600 miles a day throughout Germany aboard Deutsche Bahn trains. He travels first class, sleeps on night trains, has breakfast in DB lounges and takes showers in public swimming pools and leisure centres, all using his unlimited annual railcard.

The self-employed coder technically has no fixed abode and appears to really enjoy his unusual way of life, something which he chronicles regularly on his blog, Life on the Train.

Here is the full story, via John McLennan.  It costs him about ten thousand euros a year.  And he reports:

‘My favourite route leads through the Middle Rhine Valley between Mainz and Bonn. Here the trains always travel very slowly along the river. It’s a beautifully picturesque route that stretches at the foot of the vineyards. The view outside is wonderful.’

I can second that judgment.

Is Bidenomics working?

by  Tyler Cowen in

It is too soon to say, as I express in my 2x the usual length Bloomberg column.  It is amazing how many people are swallowing this one whole.  Here is the simplest point:

The biggest problem is that it’s not yet clear these investments are going to pay off. They are being paid for with borrowed money, not higher taxes or lower spending elsewhere. It is always possible to boost wages and employment in the short run by funding new investments with borrowed money. The critical question is whether those investments will succeed in the long run.

And:

If they do not, today’s boom will eventually turn into a bust. Sooner or later, the federal government will have to pay for all this borrowing and spending, and that will mean some mix of (additional) tax hikes and spending cuts. That contractionary fiscal policy will hurt the economy, giving back some or all of the gains it is reaping today. The net effect of this reversal of fiscal policy could even be negative.

And is it working?

One defense of the limited global scope of Bidenomics is that the most the US can hope to do is to “take care of our own.” That may be true, but it does not alter the underlying reality. If the new investments do not bring about a significantly greener world, they will have failed. In a matter this serious, it really is about results.

Another possible outcome is more optimistic: Namely, the rest of the world will move to cheap green energy without needing support from Bidenomics. If that’s the case, however, then Bidenomics’ green-energy investments are still hard to justify. Why couldn’t the US simply borrow cheaper technologies from the rest of the world?

The most favorable scenario for Bidenomics is that US investments lead, through faster innovation and shallower learning curves, to cheaper green energy sources that otherwise would not have come about. Again, that is certainly possible. And again, it is hardly obvious that it is the most likely outcome.

We shall see.  The “everything-bagel” gets discussed as well.

Monday assorted links

by  Tyler Cowen

1. Houston (Siena) fact of the day.

2. Royals receiving payment from land.

3. Katherine Boyle on the hard realignment.

4. Most common domesticated animal, by county, counting humans (and pheasants!).

5. “Lebron was created by the OLS gods.”

6. Claude 3 from Anthropic.  Exciting times.

7. “Our findings suggest that lower returns increase inequality, which contradicts Piketty’s (2014) r-g formula.“

U.S.A. yikes fact of the day

by  Tyler Cowen in

Between January 2016 and December 2022, the monthly antidepressant dispensing rate increased 66.3%, from 2575.9 to 4284.8. Before March 2020, this rate increased by 17.0 per month (95% confidence interval: 15.2 to 18.8). The COVID-19 outbreak was not associated with a level change but was associated with a slope increase of 10.8 per month (95% confidence interval: 4.9 to 16.7). The monthly antidepressant dispensing rate increased 63.5% faster from March 2020 onwards compared with beforehand. In subgroup analyses, this rate increased 129.6% and 56.5% faster from March 2020 onwards compared with beforehand among females aged 12 to 17 years and 18 to 25 years, respectively. In contrast, the outbreak was associated with a level decrease among males aged 12 to 17 years and was not associated with a level or slope change among males aged 18 to 25 years.

That is by Kao-Ping Chua, et.al., from the high-quality journal Pediatrics.  So that is how we respond to crises?  By doping up the young women?  Yikes!

Via the excellent Kevin Lewis.

Further data on alcohol use amongst American youth

by  Tyler Cowen in

This paper provides the first long-run assessment of adolescent alcohol control policies on later-life health and labor market outcomes. Our analysis exploits cross-state variation in the rollout of “Zero Tolerance” (ZT) Laws, which set strict alcohol limits for drivers under age 21 and led to sharp reductions in youth binge drinking. We adopt a difference-in-differences approach that combines information on state and year of birth to identify individuals exposed to the laws during adolescence and tracks the evolving impacts into middle age. We find that ZT Laws led to significant improvements in later-life health. Individuals exposed to the laws during adolescence were substantially less likely to suffer from cognitive and physical limitations in their 40s. The health effects are mirrored by improved labor market outcomes. These patterns cannot be attributed to changes in educational attainment or marriage. Instead, we find that affected cohorts were significantly less likely to drink heavily by middle age, suggesting an important role for adolescent initiation and habit-formation in affecting long-term substance use.

Here is the article by Tatiana Abboud, Andriana Bellou, and Joshua Lewis, via tekl once again.  People, you can make things easier for the political philosophers — why should they have to weigh liberty against utility?  Just give up drinking voluntarily.

Kind of like the NBA All-Star game

by  Tyler Cowen in

In the NBA All-Star game, no one is playing defense any more, and so the score was a ridiculous 211-186, something which would never happen in a regular season game.  (Note that some of the league’s finer defenders were on the floor, though Joel Embiid, the reigning MVP and an intimidating defender, was sidelined due to injury.)  Some part of the ethic of (defensive) service has disappeared, though the players are still happy to shoot and score.  And they certainly will play defense hard when the playoffs roll around.

I’ve never seen papers on the labor supply of royal families (Cowen’s Second Law?), but I do wonder what it varies with.  It is hard to use one’s royal position to influence politics, at least in the UK.  And certainly you are not paid more if you work harder.  The King or Queen nominally owns a lot of land and art, but in practice one cannot pull income streams from those assets.  You can have a Michelangelo drawing hung in your bedroom, but that if anything is a reason not to go out in public.

You can use a royal family position to meet with lots of important people, but toward what end?  Raising money for your next start-up?  Alternatively, you can work harder to raise your stature and influence with the other royal family members (now we’re getting somewhere).  But what if that equilibrium falls apart, if only because of one or two initial defections, or in the case of the King an illness?  What external force would keep the whole struggle for royal family influence going?  Is this a case of multiple competitive equilibria, and now we (they?) are stuck in the low effort corner?  Can Lina Khan work on this?

What if they are all just pissed off with the lot of us?  In that case, what is our next move in this von Stackelberg game?  Should America reapply to the Empire with some trembling hand probability?  Would it suffice to give them Newfoundland back?  Take Northern Ireland off their hands?  Do they want us to send more or fewer tourists to London?  Should one of them marry Taylor Swift, or at least date her, to remain in the public eye?

If the NBA All-Star game is to improve, perhaps viewer censure (or mockery) for the non-cooperators is the primary way forward?

What I’ve been reading

by  Tyler Cowen in

1. Abigail Shrier, Bad Therapy: Why the Kids Aren’t Growing Up.  I agree with many of the anti-therapy arguments in this book, but still I feel that “bad therapy” is a second-order phenomenon, not the initial cause of the growing mental health problems of America’s young people.  Furthermore, the analysis (much like Jon Haidt’s recent work) should be more tightly framed in the context of the “most interventions really don’t matter that much” results in social science at the very general level.

2. Adam Shatz, The Rebel’s Clinic: The Revolutionary Life of Frantz Fanon.  Well-written and well-organized, this checks all the boxes for what I would want from a Fanon biography.  Here is an Adam Shatz NYT Op-Ed on Fanon.

3. Nabila Ramdani, Fixing France: How to Repair a Broken Republic.  What is wrong with France, from a French-Algerian point of view.  The book is full of substance, and there aren’t enough “stand alone books on countries,” so this is a good one whether or not you agree with all of the observations.

4. Michael Bliss, The Discovery of Insulin.  “Tassting the urine was the doctors’ original test for diabetes.”  An excellent biomedical history, noting that the key breakthrough came in Toronto in the 1920s.

And the AEI Press has reprinted the 1951 Edward Banfield classic Government Project.

Rainer Zitelmann has a new book out How Nations Escape Poverty: Vietnam, Poland, and the Origins of Prosperity.

Lewis E. Lehrman has published his autobiography The Sum of It All.  He was one of the important figures behind the Reagan Revolution, in addition to his longstanding presence amongst New York elites.

Saturday assorted links

by  Tyler Cowen

1. Is Somalia running on electronic money?

2. Lookism and blond privilege?

3. What do states do with fiscal windfalls?

4. Jane Austen fans oppose Jane Austen statue on the grounds that people might visit it.

5. A user has created a very useful guide to Marginal Revolution University videos.

6. Cowen’s Second Law.

7. Nvidia is now worth more than Saudi Aramco.

8. The Elon vs. OpenAI legal case.  Worth a read.