The Root of the Problem
It’s almost like the government’s imposing its will on its residents,” Trayon White, the D.C. council member for Ward 8, said at the council’s June 6 legislative meeting. He wasn’t talking about a proposed highway, a subway station, a power plant, or—perish the thought—an apartment building…White said he was concerned about the potential risk to property values and what he sees as a “reasonable fear”…[of] a public-safety concern.” He asked his colleagues to support an emergency resolution to remove them before this happened.
An incredible story by Jerusalem Demas about local politics that starts with small absurdities but raises larger questions. Can you guess the subject of concern?
Which countries will win the AI race?
That is the topic of my latest Bloomberg column, and I mean this above and beyond whichever countries make and sell AI services. Here is one bit:
Broadly speaking, most economic endeavors fall into one of two categories: those with known routines, and new projects. AI will favor nations that excel at the latter and hurt those which rely on the former.
Most activity falls into the routinized category — it describes a lot of bureaucracies, attempts at medical diagnosis, back-office work, and so on. To be clear, this is not a criticism: Routinizing activities lowers their costs. New projects — startups, attempts to build new towns or cities, trying to establish a colony on Mars, founding a new university — are different…
So to the extent a country specializes in providing routine activities, such as the call centers and back-office support provided by firms in India and the Philippines, AI presents a risk. It could take away many of those jobs and shift the associated profits to foreign firms…
In contrast, consider new projects. Current AI models are not anywhere close to being able to conceptualize a new idea, communicate the new vision, assemble and inspire the necessary talent, raise money and deal with the corporate politics — to name just a few important components of new projects. So AI cannot substitute for the essential creative forces of entrepreneurs.
That said, AI makes many new projects easier to pull off by aiding with the routine work along the way. Say you have a brilliant new idea for a fintech firm, but need help with the slide deck and marketing copy and all the email inquiries. AI will be of use to you.
So countries and regions that are good at executing new projects are the most likely to benefit from the AI revolution. Which countries might those be?
One possible candidate is China, which has successfully carried out a large number of infrastructure projects. But there is a tension between free-flowing commercial AI and the Chinese government’s policy of censorship. What if someone asks the AI some political questions that the regime is not so keen to see discussed? Exactly how much will the Chinese government allow or encourage decentralized access to quality AI models?
India is another possible winner, even though it is vulnerable in the area of back-office support. Indian infrastructure has improved by leaps and bounds in the last 10 years, a sign the nation now has greater ability to pull off new projects. The Indian Aadhaar program, which has done bio-scans of well over 1 billion Indians and helped them make and receive payments, was a major new project that largely succeeded. India has some censorship issues as well, although they are not as serious as China’s.
Saudi Arabia is planning some major projects, such as the ambitious desert city of Neom. Perhaps the Saudis will need yet further technological advances to pull off those plans, but at least they are trying to make some significant changes. They are possibly a big winner from AI advances.
Recommended, I consider other countries as well.
AOC Gets on the Anti-FDA Bandwagon
At least when it comes to suncreen. As long-time readers will know, I have been complaining about FDA over-regulation of sunscreen for a decade! Maybe now that AOC is on the case things will change.
AOC’s sunscreen video is pretty good. One point she doesn’t stress is that requiring Americans to use more oily, less natural-feeling sunscreen can cause less use and thus more skin cancer. Even more important is the general issue of reciprocity or polycentric authority:
My rule is very simple. I don’t think the FDA is better than the EMA so if any drug or device is approved in Europe it ought to be available for purchase in the United States with a label saying “Approved by the EMA. Not approved by the FDA.” (By the way, we do have reciprocity type agreements with Canada and New Zealand for food so this would not be unprecedented.)
US sunscreens are far behind the rest of the world and our regulations aren’t necessarily making our sunscreens better or safer — but it doesn’t have to be this way! pic.twitter.com/vaZXpZ2a7S
— Rep. Alexandria Ocasio-Cortez (@RepAOC) August 11, 2023
Ken Rogoff on chess and AI
From an interview:
Rogoff, who is also the Maurits C. Boas Chair of International Economics at Harvard University, doesn’t see artificial intelligence as bad for chess. “It’s actually made it more interesting so far,” he says.
Having seen how fast AI evolved within the game, Rogoff predicts applications like ChatGPT will be unrecognizable in five years. Advancements will come “faster than you think,” but if the experience of chess is any indication, the technology’s evolution won’t be as “detrimental” as some may fear…
I don’t want to sound evangelical, because I don’t know which way it’s going to go. But, yes. If you look at the experience of chess faster than you think and for longer than you think but also not necessarily as detrimental as you might think. Humans have adjusted. And it’s been very good.
JULIE HYMAN: Well, can you elaborate on that a little bit? You said it’s made chess more interesting. How?
KENNETH ROGOFF: Well, first of all, people have thought a lot of positions were boring. That the computer shows, well, try me at this position, and it turns out to be just wellsprings of creativity positions, where the best player in the world, Bobby Fischer, I think would have maybe even given me a draw back in 1975. Now is the beginning of the game for many players, so this depth of learning. Players venture much more complicated and interesting positions because they have other ways to explore them.
So surprisingly, we thought it would lead to more draws, right? If you figured out better, you’re going to get more draws. Not at all. So here’s this simple compared to human intelligence game, which you would think you would solve out, and yet you find these layers of interest. I think we’ll see this in art and many, many things.
Here is the link, it references the longer chat with some economics of debt and inflation.
Friday assorted links
1. “With a database of 33 929 individual observations, the findings show that Spaniards who left the country to settle in the Spanish territories were positively self-selected. Additionally, differences are observed in the human capital of those who chose to settle in Mexico, who had a higher level of numeracy, than those who chose Peru.” Link here.
2. Jason Furman on why we didn’t have a recession.
4. More on reading ancient scrolls. From the great Casey Handmer.
5. Very bad markets in everything. And is there a neo-Nazi resurgence in southern Brazil? (FT).
Deregulating Oregon (from my email)
It is now legal to pump one’s own gas at gas stations in Oregon, making New Jersey the only US state where it’s not. (Article link.) The surprising part of the new Oregon law: The price must be identical for self-serve and attendant-pumped gas. Also, at least half the pumps must have an attendant. I’m no economist, but it does seem like the self-pump patrons will be subsidizing the “free” labor received by the others. I’m also no political scientist, but I wonder if this bit is intentional to dampen the possible success of self-serve gas. I’m also curious what the calculations on the part of station owners will be in terms of how much labor to employ. My estimate would be that if a $15/hr attendant takes about 4 minutes per service and each is $50, labor costs would be adding about 1% to the fuel price, but this would be much higher in places that are less busy and not working constantly, and lower in places that are busy enough to constantly have many overlapping cars being filled. There’s some sort of equilibrium balancing waiting times for attendants and gas prices that awaits…
That is from Raghuveer Parthasarathy.
On the negative correlation between price and restaurant quality
From my email, from an anonymous reader:
On your question of whether there’s a model for the apparent negative correlation between food quality and price:
It is often observed that food quality and the “atmosphere” of a restaurant appear to be negatively correlated. (As I’m sure Taleb points out somewhere, they are not actually negatively correlated, but only appear so because the restaurants that are low quality in both food and atmosphere do not survive.)
I think the apparent negative correlation between quality and atmosphere among surviving restaurants presents itself as a negative correlation between quality and price for two reasons:
1) There are far more people who go to a restaurant because it is familiar and/or convenient (“comfort market”) or fashionable/trendy (“mimetic market”) than people who actively seek out restaurants with good food (“gourmet market”). The demand curve is higher in the market for comfort/mimetic restaurant services (in which food quality does not matter above a certain baseline level of palatability) than in the market for gourmet restaurant services. While restaurants serving the gourmet market and restaurants serving the comfort/mimetic markets are substitutes, the cross-price elasticity of demand between them is probably quite low. When PF Chang’s raise their prices the customers go to Applebee’s, not to the high quality, family-owned Chinese place in the strip mall.
People who actively seek out good food are more likely to know how to cook good food themselves, providing a dimension of competition for restaurants in the gourmet market that restaurants in the comfort and mimetic markets do not have to deal with.
Within the gourmet market I would imagine that price and quality are positively correlated. If it really is the case that price and quality are negatively correlated even within the market of restaurants serving people who care about food quality, then I don’t know how to account for that or why anyone would ever go to the higher priced restaurant, unless purely for variety or for mimetic reasons, in which case those higher priced restaurants are not in the gourmet market but are in the mimetic market (since they would be paying extra for something other than pure food quality, even if the food is quite good – the restaurant is not entirely about the food).
The essential point is that since food quality and restaurant “atmosphere” appear to be negatively correlated, and since most will pay more for atmosphere (comfort, familiarity, fashion, etc) than for quality food, it also appears that food quality and price are negatively correlated.
That was then, this is now (sacred robot edition)
From the Amazon summary of the forthcoming book by Elizabeth King and W. David Todd:
An abundantly illustrated narrative that draws from the history of art, science, technology, artificial intelligence, psychology, religion, and conservation in telling the extraordinary story of a Renaissance robot that prays.
This volume tells the singular story of an uncanny, rare object at the cusp of art and science: a 450-year-old automaton known as “the monk.” The walking, gesticulating figure of a friar, in the collection of the Smithsonian Institution’s National Museum of American History, is among the earliest extant ancestors of the self-propelled robot. According to legend connected to the court of Philip II of Spain, the monk represents a portrait of Diego de Alcalá, a humble Franciscan lay brother whose holy corpse was said to be agent to the miraculous cure of Spain’s crown prince as he lay dying in 1562.
In tracking the origins of the monk and its legend, the authors visited archives, libraries, and museums across the United States and Europe, probing the paradox of a mechanical object performing an apparently spiritual act. They identified seven kindred automata from the same period, which, they argue, form a paradigmatic class of walking “prime movers,” unprecedented in their combination of visual and functional realism. While most of the literature on automata focuses on the Enlightenment, this enthralling narrative journeys back to the late Renaissance, when clockwork machinery was entirely new, foretelling the evolution of artificial life to come.
Ross Douthat, telephone! (I did, of course, pre-order the book.)
Thursday assorted links
Japan estimate of the day
An estimated 42% of adult Japanese women may end up never having children, the Nikkei newspaper reported, citing a soon-to-be-published estimate by a government research group.
In a more optimistic scenario, a quarter of women born in 2005 may end up not having offspring. The midpoint estimate by Japan’s National Institute of Population and Social Security Research calls for a third of them not having children, the newspaper reported Wednesday.
My very excellent Conversation with Paul Graham
Here is the audio and transcript, here is the episode summary:
Tyler and Y Combinator co-founder Paul Graham sat down at his home in the English countryside to discuss what areas of talent judgment his co-founder and wife Jessica Livingston is better at, whether young founders have gotten rarer, whether he still takes a dim view of solo founders, how to 2x ambition in the developed world, on the minute past which a Y Combinator interviewer is unlikely to change their mind, what YC learned after rejecting companies, how he got over his fear of flying, Florentine history, why almost all good artists are underrated, what’s gone wrong in art, why new homes and neighborhoods are ugly, why he wants to visit the Dark Ages, why he’s optimistic about Britain and San Fransisco, the challenges of regulating AI, whether we’re underinvesting in high-cost interruption activities, walking, soundproofing, fame, and more.
Of course mostly we talked about talent selection, here is one bit:
COWEN: If you think that something has gone wrong in the history of art, and you tried to explain that in as few dimensions as possible, what’s your account of what went wrong?
GRAHAM: Oh, I can explain this very briefly. Brand and craft became divorced. It used to be that the best artists were the best craftspeople. Once art started to be reproduced in newspapers and magazines and things like that, you could create a brand that wasn’t based on quality.
COWEN: So, you think it’s mass media causing the divorce between brand and craft?
GRAHAM: It certainly helps.
COWEN: Then talent’s responding accordingly. Fundamentally, what went wrong?
GRAHAM: You invent some shtick, right?
COWEN: Right.
GRAHAM: And then — technically, it’s called a signature style — you paint with this special shtick. If someone can get some ball rolling, some speculative ball rolling, which dealers specialize in, then someone buys the painting with your shtick and hangs it on the wall in their loft in Tribeca. And people come in and say, “Oh, my goodness, that’s a so and so,” which they recognize because they’ve seen this shtick. [laughs]
COWEN: Say, if we have modernism raging in the 1920s, and the ’20s mass media is radio for the most part —
GRAHAM: No, no, no, newspapers were huge. Modernism was well —
COWEN: But not for showing paintings, right? There’s no color in the papers. You had to be —
And here is one exchange on talent:
COWEN: Why is there not more ambition in the developed world? Say we wanted to boost ambition by 2X. What’s the actual constraint? What stands in the way?
GRAHAM: Boy, what a fabulous question. I wish you’d asked me that an hour ago, so I could have had some time to think about it between now and then.
COWEN: [laughs] You’re clearly good at boosting ambition, so you’re pulling on some lever, right? What is it you do?
GRAHAM: Oh, okay. How do I do it? People are, for various reasons — for multiple reasons — they’re afraid to think really big. There are multiple reasons. One, it seems overreaching. Two, it seems like it would be an awful lot of work. [laughs]
As an outside person, I’m like an instructor in some fitness class. I can tell someone who’s already working as hard as they can, “All right, push harder.”
[laughter]
It doesn’t cost me any effort. Surprisingly often, as in the fitness class, they are capable of pushing harder. A lot of my secret is just being the person who doesn’t have to actually do the work that I’m suggesting they do.
COWEN: How much of what you do is reshuffling their networks? There are people with potential. They’re in semi-average networks —
GRAHAM: Wait. That was such an interesting question. We should talk about that some more because that really is an interesting question. Imagine how amazing it would be if all the ambitious people can be more ambitious. That really is an interesting question. There’s got to be more to it than just the fact that I don’t have to do the work.
COWEN: I think a lot of it is reshuffling networks. You need someone who can identify who should be in a better network. You boost the total size of all networking that goes on, and you make sure those people with potential —
GRAHAM: By reshuffling networks, you mean introducing people to one another?
COWEN: Of course.
GRAHAM: Yes.
COWEN: You pull them away from their old peers, who are not good enough for them, and you bring them into new circles, which will raise their sights.
GRAHAM: Eh, maybe. That is true. When you read autobiographies, there’s often an effect when people go to some elite university after growing up in the middle of the countryside somewhere. They suddenly become more excited because there’s a critical mass of like-minded people around. But I don’t think that’s the main thing. I mean, that is a big thing.
Definitely recommended.
Fairfax County facts of the day
Northern Virginia might be the safest region in the whole country, based on this Bloomberg analysis of crime and external-cause mortality data. The local commonwealth’s attorney likes to boast that Fairfax is the safest county of its size. Letting more people live there would not change that.
Forty percent of Fairfax residents aged five and older speak a language other than English at home, per the May strategic plan update. The county’s extraordinary ethnic and cultural diversity makes it a paradise for employers and food lovers alike.
That is from Luca Gattoni-Celli, most of the post concerning zoning issues.
Video quiz on the supply curve
Wednesday assorted links
1. “…they estimate that there are about 20 times more free-floating worlds in our Milky Way than stars, with Earth-mass planets 180 times more common than rogue Jupiters.” (NYT)
2. One attempt to explain U.S. consumer sentiment.
3. Claims by Mari Andrew, about many things.
4. What does the math say about the plausibility of conspiracy theories?
6. Union opposes bringing in Taiwanese workers to U.S. TSMC plant.
Happy Birthday Singapore!
Singapore is a wonderful instance of the advantage of the unrestricted enterprise of free trade: so late as the year 1822 there was scarcely a native hut, certainly not one European habitation on the island; in eight years it had not only grown into the most important settlement in the whole of the Malay Archipelago, but was the emporium of more trade than the whole of the other ports put together. The trade is almost exclusively one of barter, the English merchant procuring profitable exports in exchange for English goods. The annual value of importations in 1830 was five millions sterling.
The advantages the native merchants experience in finding free trade established at Singapore has withdrawn the whole commerce from the neighboring Dutch ports. On my subsequently going to Batavia I found the harbour there perfectly denuded between 300 and 400 at anchor bringing produce from every island in the archipelago.
The society of Singapore was tolerably extensive, and most hospitable, and conviviality and good fellowship reigned pre-eminent.
That is from Major Thomas Skinner, Fifty Years in Ceylon, published in 1891, largely compiled in 1868. Overall an interesting and forthright book, mostly about Ceylon of course.