My 2018 Politico piece on whether we are descending into fascism
In 2018 I published an article in Politico, arguing that fascism would not come to America. In part that is because of our very long democratic traditions (much longer than Weimar!), and in part because American bureaucracy has become unmanageable, thus limiting the power of the executive. DOGE in particular has been a quite vivid representation of the latter point, as I made it in 2018 — “The net result is they simply can’t control enough of the modern state to steer it in a fascist direction.”
A few people have asked me to revisit that prediction, and frankly I think it is looking great. (I do not doubt, however, that the Trump administration represents a major increase in blatant corruption, and a deterioration of norms of governance, most of all in the areas of public health and science but not only. I think of America as evolving back to some of its 19th century norms, and often bad ones, not fascism.)
Noah Smith wrote recently:
Trump is cosplaying as a dictator. But so far he’s backed down on: * tariffs * ICE sweeps * Abrego Garcia * Greenland/Canada/Panama * Ukraine aid * DOGE He does care about public opinion, a lot.
Here is Noah’s longer essay.
Here is a recent NYT headline: “Trump Loses Another Battle in His War Against Elite Law Firms.” The judiciary has stood up to Trump firmly, and he has backed down. The Army parade, by the way, was mostly pathetic and hardly served as a call to fascist arms. The Kennedy Center is not the new Haus der Kunst.
It was some while back that Trump pulled the nomination of Stefanik to be UN ambassador, on the grounds that the Republican margin in the House was extremely thin. All I can say is that Hitler would have done it differently.
Updating our views of nuclear deterrence, a short essay by o3 pro
I asked o3 pro how very recent events should update our perspectives on Schelling’s work on nuclear deterrence. I asked for roughly 800 words, here is one excerpt from what I received:
…Deterrence models that ignore domestic legitimacy under‑predict risk‑taking.
6. The United States is both referee and participant
American destroyers shooting down Iranian missiles create a blended deterrence model: extended defense. That blurs the line between the traditional “nuclear umbrella” and kinetic participation. It also complicates escalation ladders; Tehran now weighs the prospect of an inadvertent clash with the U.S. Fifth Fleet every time it loads a Shahab‑3. The war thus updates Schelling’s idea of “commitment” for the 21st‑century alliance network: digital sensors, shared early‑warning data, and distributed interceptors knit allies into a single strategic organism, reducing the freedom of any one capital to de‑escalate unilaterally.
7. Lessons for non‑combatant nuclear states
New Delhi and Islamabad will notice that an opaque Israeli arsenal backed by high‑end defenses delivered more bargaining power than Iran’s half‑finished program. Pyongyang may conclude the opposite: only a tested, miniaturized warhead guarantees respect. Meanwhile European leaders should ponder how much of their own deterrent posture rests on aging U.S. missiles whose effectiveness presumes no adversary fielding Israel‑grade intercept layers. The Israeli‑Iranian conflict is therefore less a regional exception than a harbinger.
Here is the full “column.”
Some northern parts of Spain
Salamanca still feels part of the orbit of Madrid, but León does not. Many of the faces are more Celtic, and the mood of the city can be drab in an eastern European way. Deindustrialization can be observed. It is a real city, not much dependent on tourism, though the cathedral is one of the most beautiful in Europe.
Santander, a beach town, was much nicer than expected. There is not much to do there, but it reminds me of how perhaps Nice might have been in 1974. Fully for tourists, but somehow not very touristy? And thus extremely pleasant and charming. Places like that barely exist any more. They are either quite obscure, such as Durango, Mexico, or they are overwhelmed by tourists. Seafood was excellent, and it is a much larger city than I was expecting. Nice promenades on the water.
Hondarribia is a Basque town and fishing village that feels like it should be its own country. The half-timbered homes and unusual colors set it apart from anywhere else in Europe I have been. Small, one day there is fine, but one of Europe’s best undervisited locales?
Matt Yglesias on debating
This is maybe an idiosyncratic view of mine, but I think that “debating” people — particularly in live or quasi-live forms — is a bad epistemic practice.
It essentially rewards people for being dogmatic, incurious, and willfully slippery with rhetoric. I think the best thing to do with live discussion is to have a friendly conversation, and the best way to do debates is a written exchange of ideas.
I thought the exchange I did in Democracy with Elizabeth Pancotti and Todd Tucker about tariffs was interesting and clarified the issues. My summation of it would be that I think Pancotti and Tucker raise a lot of good points about specific reasons why one might not want unfettered free trade, but that I think the Econ 101 case for free trade is accurate. This means that while you might sometimes want to deviate from free trade, any time you do so you are incurring an economic cost in order to pursue some other objective. My opponents, I think, wrongly deny this. They like to talk about the specifics of this case or that case, but the actual issue is that they either deny that tariffs are costly or else are working from an implicit degrowth framework in which the fact that the tariffs are costly isn’t relevant. But I came away from our exchange feeling like I understood them better, and I hope readers learned something.
That is from his Substack. I mostly agree. In practice, one big reason to debate is so you can put four people on the floor and attract an audience and some public attention, yet without slighting any one of the “stars” by making it a panel. As a method of truth-seeking, I do not think public debate does very well.
More from YouTuber Any Austin
COWEN: Next question. Speaking honestly, what makes you a great YouTuber?
AUSTIN: Speaking honestly, all right.
COWEN: We know you work hard. We know you’re smart, yes, yes, but what’s the secret sauce?
AUSTIN: Well, I don’t think I should know that. I think, honestly, the less I know about . . . I think all I should have in my head is, “This video that I’m making right now is going to be the best video I could possibly make.” And that’s all I should think. The less I understand about my own inner machinations, the better because, number one, I’m going to get it wrong. You see this all the time with artists who learn what their thing is, and they just fly off a cliff.
COWEN: They become much worse, right?
AUSTIN: They become so much worse.
COWEN: Parodies of themselves.
AUSTIN: Exactly. The less you know about how you do what you do, the better. I might, for my own self-protection, refuse to answer this question.
Again, here is the video, audio, and transcript.
Saturday assorted links
1. Progress for Progress Ireland.
2. Fischer Black’s daughter on Fischer Black (WSJ).
3. LLMs beating trained humans in legal reasoning.
5. Khamenei out as Supreme Leader in 2025? Currently at about 50 on Polymarket.
Emergent Ventures UK Tranche
I’m pleased to announce a new tranche of Emergent Ventures, focused specifically on progress-oriented projects in the United Kingdom. This initiative is made possible in partnership with Founders Pledge and Renaissance Philanthropy.
While EV has regarded the UK as a priority area from the beginning, this tranche enables increased support for pro-science, pro-progress projects at a critical time. Those interested can apply through the standard Emergent Ventures application process, selecting “United Kingdom” in the dropdown for “My project will affect.”
The Return of the American Model
In talking about Operation Warp Speed I repeatedly placed it in the context of what I call the American Model of emergency response. The American model is the fusion of federal spending power with the speed, ingenuity, and innovation of the private sector. It aligns the visible hand of government with the invisible hand of the market. Operation Warp Speed was the most recent example, but the most important demonstration of the American Model was the shift to a wartime economy during World War II.
As Arthur Herman recounts in the excellent Freedom’s Forge, it wasn’t centralized command or sweeping nationalization that turned the United States into the “arsenal of democracy.” It was a partnership between government and business—figures like William Knudsen and Henry Kaiser mobilized private firms to outproduce the Axis through decentralized execution and rapid innovation funded by federal investment and aided by deregulation and the ending of New Deal attacks on markets and entrepreneurs. William Knudsen, the penniless Danish immigrant who worked his way to key positions in Ford and General Motors, being commissioned as a lieutenant general in the United States Army epitomizes the American Model.
In an incredible piece, Shyam Sankar the CTO of Palantir explains why he has accepted a commission as a lieutenant colonel in the Army Reserve’s newly formed Detachment 201: Executive Innovation Corps.
I decided to join the military for reasons both patriotic but also intensely personal.
My father grew up in a mud hut in Tamil Nadu, the southernmost state in India. He was the youngest of nine children and the first in his family to attend college—an education made possible only by his eight siblings pooling their wages. After graduation, he moved to Lagos, Nigeria, to build and run a pharmaceutical plant. Through ingenuity and an enterprising spirit, he became successful at a remarkably young age.
When I was 2, our life in Lagos ended violently. Five armed men broke into our home, killed our dog, pistol-whipped my father, and threatened my mother as they demanded money from the company safe. We fled Lagos with nothing, and started over in America.
My father took a job at a company that supplied souvenirs to theme parks in Orlando, Florida. My childhood memories are punctuated by Space Shuttle launches seen from my school courtyard, and by the bone-rattling double sonic booms of the Shuttles’ reentry. Lessons about the power of American technology were literally falling from the sky around me.
My father never again saw the material success of his youth, and he faced setback after setback in America. But he always reminded me of the counterfactual: “But for the grace of this nation, you would be dead in a ditch in Lagos.” America gave him life, liberty, and possibility.
Many lessons here about immigration, markets, universities, elites and more. Read the whole thing.
The smoking tax Laffer curve: Australia is not exempt from the laws of economics
Over the past decade, the excise rate per cigarette has tripled from 46c to $1.40. The excise now accounts for $28 of the average $40 price for a packet of 20 cigarettes.
For some time a rising tax was associated with the twin benefits of falling smoking rates and rising revenue, but after peaking at $16.3bn in 2019-20, federal excise receipts have plunged.
The March budget forecasts tobacco excise receipts will be just $7.4bn in this financial year – the lowest since 2012-13 – and will continue to fall to $6.7bn by the end of the decade.
Rather than a sudden collapse in smoking rates, experts point to an explosion in the availability of black market tobacco in recent years.
Here is the full story.
What (else) do unions do?
From a 2023 paper by Vojislav Maksimovic and Liu Yang:
Using plant-level data from the Census Bureau, we show that in addition to paying higher wages and benefits, unionized plants have lower and less effective incentives. Unionized plants do not exhibit the same positive associations between incentives and investment and growth found in non-unionized plants. This effect holds among both non-managerial and managerial employees, although it has a more pronounced influence on the former group. Consequently, unionized plants experience higher rates of closure, reduced investment, and slower employment growth. We also find significant spillover effects within the firm: partially unionized firms not only offer higher wages but also maintain weaker incentives in their non-unionized plants compared to their industry peers. These effects are economically significant and are half of our estimated reduction in incentives in unionized plants. This pattern aligns with the hypothesis that incentives in non-unionized plants create disutility for the median worker. Spillovers reduce employment and efficiency and make firms less attractive as potential targets, thus reducing the market’s effectiveness in allocating corporate assets. By leveraging recent changes in state-level right-to-work laws, we provide causal evidence that states that adopt such laws experience a boost in employment and investment.
The New Monetary Economics is underway, legislation allowing
Walmart & Amazon are looking into issuing their own stablecoins—cutting out banks, cards, and slow settlement. If laws like the Genius Act clear, we might be on the cusp of merchant-issued money. Are you ready for a world where checkout includes “Pay with WalmartCoin/AmazonCoin”?
Here is the tweet, here is the WSJ article. Here is my podcast with Alex on the new monetary economics. Note the tagline “What if the most radical ideas about money weren’t wrong—just early?”
The value of good management, and also talent allocation
Why do managers matter for firm performance? This paper provides evidence of the critical role of managers in matching workers to jobs within the firm using the universe of personnel records from a large multinational firm. The data covers 200,000 white-collar workers and 30,000 managers over 10 years in 100 countries. I identify good managers as the top 30% by their speed of promotion and leverage exogenous variation induced by the rotation of managers across teams. I find that good managers cause workers to reallocate within the firm through lateral and vertical transfers. This leads to large and persistent gains in workers’ career progression and productivity. Seven years after the manager transition, workers earn 30% more and perform better on objective performance measures. In terms of aggregate firm productivity, doubling the share of good managers would increase output per worker by 61% at the establishment level. My results imply that the visible hands of managers match workers’ specific skills to specialized jobs, leading to an improvement in the productivity of existing workers that outlasts the managers’ time at the firm.
That is from a recent paper by Virginia Minni. Via the excellent Kevin Lewis.
Friday assorted links
1. More economics-themed comedy coming to NYC.
2. Student assessment in the age of AI.
3. Amanda Feilding obituary (NYT): “She had a number of love affairs with men who also drilled small holes in their heads…”
4. The rise and fall of inheritance flows.
5. Rafael Yglesias, telephone!
6. New issue of Works in Progress.
7. Something about a guy and books, though he is wrong about Jean-Christophe. Both Chris Weber and I love the book and have read it. He is right that it is wonderful.
Which countries won’t exist in the 22nd century?
Or sooner, that is the topic of my latest essay for The Free Press. Excerpt:
The most radical redefinition of the nation-state may be coming from Haiti, where preexisting forms of government appear to have collapsed altogether. Haiti has been a troubled place for a long time, but when I used to visit in the 1990s you could come and go intact—at least if you exercised commonsense precautions.
But since 2023, there have been no elected officials of any kind present in Haiti. That is highly unusual for what was supposed to be a democracy. Circa mid-2025, criminal gangs took control of most of Port-au-Prince, the capital and most populous city of the country. Murder rates are skyrocketing, and if somehow I were foolish enough to show my face in the country (by the way, the main airport is not usually open) it is likely I would be kidnapped almost immediately.
The remaining fragments of the government have taken to carrying out drone attacks on the criminal gangs, but without making much if any progress in reestablishing their rule. Mainly it is the warlords who are left, and who also run the country.
Various U.S. interventions, most notably under President Clinton in the 1990s, and UN-backed troop deployments have failed to prevent Haiti from falling to pieces. You can say the world has not tried hard enough, but you cannot say the world has not tried. There is still a Kenyan-led, UN-affiliated force in Haiti, but it does not appear to exert any significant influence.
One possibility is that a dominant gang emerges and becomes the new government, albeit a highly oppressive one. Yet it is far from obvious that consolidation is in the works, as in many situations we observe multiple, warring drug gangs as a persistent outcome. Most likely, Haiti will have ceased to be a sustainable nation-state with an identifiable government. It would better be described as a state of Hobbesian anarchy.
Worth a ponder.
One or two game theoretic observations
So far the campaign is a major “win” for (non-LLM) AI, though that is not yet a story. There is a reason why Palantir was priced at 300x earnings.
If you are one of those Iranian leaders, or nuclear scientists, your calculus has to be that you can never step outside again, at least not anytime soon. I believe that situation is unprecedented in the history of wartime? It remains to be seen how much that will shape the logic of deterrence and in turn outcomes, but I will be pondering this and observing.