Which countries are the losers in the new mercantilism?
New tax credits for manufacturing batteries, solar-power equipment and other green technology are drawing a flood of capital to the U.S. The European Union is trying to respond with its own green-energy support package. Japan has announced plans for $150 billion of borrowing to finance a wave of investment in green technology. All of them are working to become less dependent on China, which has a big lead in areas including batteries and the minerals to make them.
Now, some smaller players are getting left behind. Many are nimble economies that were on the rise during decades of free trade, but are at a disadvantage in a new era of aggressive industrial policy. Industrialized nations such as the U.K. and Singapore lack the scale to compete against the biggest economic blocs in offering subsidies. Emerging markets such as Indonesia, which had hoped to use its natural resources to climb the economic ladder, are also threatened by the shift.
Here is more from Ballard, Douglas, and Emont at The Wall Street Journal.
Listen to Lech
WashPost: Of the giants who brought down the Iron Curtain — among them Ronald Reagan, Margaret Thatcher, John Paul II, Vaclav Havel — only Walesa is still with us. At 79, he still looks as vigorous as the young electrician who led a workers’ uprising against the “dictatorship of the proletariat”; forced Poland’s Marxist regime to recognize the first independent trade union in the communist world; was imprisoned under martial law only to later force his former jailers at the negotiating table to allow free elections; and who, as the first president of the newly free Poland, anchored his former Warsaw Pact country in the institutions of the West.
Sitting in his office at the European Solidarity Center, the museum built on the grounds of the old Lenin Shipyard where Solidarity was born, I asked about polls showing that half of young Americans have a positive view of socialism. What is his message for young people who have no living memory of communism? “Many young people are actually fooled to accept communism as an idea,” he said, speaking through an interpreter. “There are beautiful sentences talking about equality, about justice. … But as soon as you start putting that system into practice, all sorts of serious disasters come about. But young people quite often don’t know it. We have experience [with socialism], so we really know something about it. So, I strongly recommend rejecting it.”
*Travels with Tocqueville Beyond America*
Again, that is the new book by Jeremy Jennings, here is another excerpt:
These grave misgivings [about travel] have persisted. “I have been reading books of travels all my life,” Jean-Jacques Rousseau wrote, “but I have never found two that gave me the same idea of the same nation.” Those who “travel best,” he added, “travel least,” and, in Rousseau’s opinion, they travelled not by coach but on foot. Others have agreed. Writing at the end of the eighteenth century, Xavier de Maistre (brother to the more famous Joseph) resolved only to journey for forty-two days around his own room, “safe from the restless jealousy of men.” “We will travel slowly,” he wrote, “laughing as we go at those travellers who have visited Rome and Paris.” Heading north, Maistre discovered his bed. On this view, one travelled best by moving hardly at all. In the nineteenth century, John Stuart Mill displayed a similarly dismissive attitude. “In travelling,” he wrote, “men usually see only what they already had in their own minds.”
From another segment of the book:
Gustave de Beaumont not only travelled to America with Tocqueville but accompanied him on trips to England and Ireland and to Algeria. No one was better able to assess how Tocqueville travelled. Tocqueville’s way of travelling, Beaumont wrote, was “peculiar.” Everything was “a matter for observation.” Each day Tocqueville framed in his head the questions he wanted to ask and resolve. Every idea that came into his mind was noted down, without delay, and regardless of where he was. For Tocqueville, Beaumont continued, travelling was never just a form of bodily exercise or simply an agreeable way to pass the time. “Rest,” Beaumont wrote, “was foreign to his nature.” Whether or not his body was actively employed, Tocqueville’s mind was always working. Never could he undertake a walk as a simple distraction or engage in conversation as a form of relaxation. The “most agreeable” discussion was the “most useful” discussion. The worst day was “the day lost or ill-spent.” Any loss of time was an inconvenience. Consequently, Tocqueville travelled in a “constant state of tension,” never arriving in a place without knowing that he would be able to leave it.
Recommended, buy it here.
Bob Ekelund has passed away
A very smart guy, here is a tribute from Don Boudreaux. He was widely published in many areas, including history of economic thought, most of all I liked his work in the economics of religion.
Saturday assorted links
1. “The US suburban vacation – one of my favorite things about this business.”
2. Mark Skousen on gross output measures. And founding engineer & founding designer for building a LLM-augmented digital reader (job ad).
3. Identified flying objects, not flying.
4. Air Genius Gary Leff blogs Beenie Man.
5. A closer look at political bias in ChatGPT.
6. James Buckley, RIP, at 100 years old. He was the fourth of ten children.
Compensating Kidney Donors
LA Times: Never in the field of public legislation has so much been lost by so many to one law, as Churchill might’ve put it. The National Organ Transplant Act of 1984 created the framework for the organ transplant system in the United States, and nearly 40 years later, the law is responsible for millions of needless deaths and trillions of wasted dollars. The Transplant Act requires modification, immediately.
We’ve got skin in this game. We both donated our kidneys to strangers. Ned donated to someone who turned out to be a young mother of two children in 2015, which started a chain that helped an additional two recipients. And Matt donated at Walter Reed in 2021, after which his kidney went to a Seattleite, kicking off a chain that helped seven more recipients, the last of whom was back at Walter Reed.
…The National Organ Transplant Act prohibits compensating kidney donors, which is strange in that in American society, it’s common to pay for plasma, bone marrow, hair, sperm, eggs and even surrogate pregnancies. We already pay to create and sustain life.
…Compensation models have been proposed in the past. A National Institutes of Health study listed some of the possibilities, including direct payment, indirect payment, “in kind” payment (free health insurance, for example) or expanded reimbursements. After much review, we come down strongly in support of indirect payment, specifically, a $100,000 refundable federal tax credit. The tax credit would be uniformly applied over a period of 10 years, in the amount of $10,000 a year for those who qualify and then become donors.
This kind of compensation is certainly not a quick-cash scheme that would incentivize an act of desperation. Nor does it commoditize human body parts. Going forward, kidney donation might become partly opportunistic rather than mostly altruistic, as it is now. But would it be exploitative? Not at all.
Long-time readers will know that I have argued for the greater use of incentives in organ donation both for live donors and cadaveric donors. Pecuniary compensation is one possibility but so are no-give, no-take laws that give those who previously signed their organ donor cards priority should they one day need an organ.
Sebastian Bensusan on Argentina dollarization
Great to see an article on dollarization! Two things that were not mentioned”
Argentina is already substantially dollarized. Absolutely nobody saves in pesos, so the amount of USD needed to “dollarize” the economy is much smaller than you’d think.
The difference between convertibilidad (90s) and dollarization is less stark than what you’d expect. If it happens:
1. Peronists will win elections again and will likely try to undo it (Zimbabwe undid it).
2. If dollars are in bank accounts, the government can simply steal everybody’s dollars. This is effectively what happened during el corralito. People had USD denominated accounts and those were forcibly converted to peso, and then devalued from 1:1 to 3:1, effectively evaporating 2/3s of everybody’s savings.3. So, the mechanics of a future dollarization matter greatly in making this following sentence from your article true:
But that was a mere promise, and the promise of convertibility was broken rather spectacularly
Because bank deposits are always promises and USD-denominated Argentinian bank accounts would also be promises that would eventually be broken.
Here are some ways to dollarize that would be future-proof:
1. Allow Argentinians to own and transact locally usinn American or foreign bank accounts that are outside of the government’s jurisdiction. This is effectively what parts of Venezuela’s economy have been doing via Zelle.
2. Crypto
Are these two practical? TBD!
Emergent Ventures winners, 28th cohort
Anup Malani and Michael Sonnenschein, Chicago and Los Angeles respectively, repeat winners, now collaborating on a new project of interest.
Jesse Lee, Calgary, to lower the costs on developing safe and effective sugar substitutes.
Russel Ismael, Montreal, just finished as an undergraduate, to develop a new mucoadhesive to improve drug delivery outcomes.
Calix Huang, USC, 18 years old, general career development, AI and start-ups,
Aiden Bai, NYC, 18, “to work more on Million.js, an open source React alternative,” and general career development. Twitter here.
Shrey Jain, Toronto, AI and cryptography and privacy.
Jonathan Xu, Toronto, currently Singapore, general career support, also with an interest in AI, fMRI, and mind-reading.
Viha Kedia, Dubai/ starting at U. Penn., writing, general career development.
Krishiv Thakuria, entering sophomore in high school, Ontario, Ed tech and general career development.
Alishba Imran, UC Berkeley/Ontario, to study machine learning and robotics and materials, general career development, and for computing time and a home lab.
Jonathan Dockrell, Dublin, to finance a trip to Próspera to meet with prospective venture capitalists for an air rights project.
Nasiyah Isra-Ul, Chesterfield, VA, to write about, promote, and create a documentary about home schooling.
Sarhaan Gulati, Vancouver, to develop drones for Mars.
And the new Ukrainian cohort:
Viktoriia Shcherba, Kyiv, now entering Harris School, University of Chicago, to study economic and political reconstruction.
Dmytro Semykras, Graz, Austria, to develop his career as a pianist. Here is one recent performance.
Please do note there is some “rationing of cohorts,” so some recent winners are not listed but next time will be. And those working on talent issues will (in due time) end up in their own cohort.
Thinking about God increases acceptance of artificial intelligence in decision-making
Artificial intelligence (AI), once merely the draw and drama of science fiction, is now a feature of everyday life. AI is commonly used to generate recommendations, from the movies we watch to the medical procedures we endure. As AI recommendations become increasingly prevalent and the world grapples with its benefits and costs, it is important to understand the factors that shape whether people accept or reject AI-based recommendations. We focus on one factor that is prevalent across nearly every society: religion. Research has not yet systematically examined how religion affects decision-making in light of emerging AI technologies, which inherently raise questions on the role and value of humans. In introducing this discussion, we find that God salience heightens AI acceptance.
That is from a recent paper by Mustafa Karatas and Keisha M. Cutright. Speculative yes, but worth speculating about. Via the excellent Kevin Lewis.
Argentina should dollarize
Here is my Bloomberg column on that topic, here is the trickiest point:
Another concern, more significant, is that dollarization would be a huge upfront cost to the government of Argentina: Someone would have to actually come up with all the dollars to serve as currency. Keep in mind, however, that the economy of Argentina would also be acquiring a valuable asset — namely, dollars. The net cost should be zero; realistically, acquiring the dollars should prove a net positive. Argentina’s government needs to invest in the future of its citizens, and introducing a stable currency is one of the best ways to do so.
Dollarization might involve major fiscal adjustments, if only to accumulate the dollars to make it work, and that could bring chaos to Argentina politics. That is a real risk, but it has to be weighed against the political risks of continuing hyperinflation. At least dollarization offers some chance of eventual success.
I would add that the government of Argentina cannot and should not forsake all public sector investment. Think of dollarization as a relatively high return form of such investment. As for whether using the euro would be better, I think the ties of the Argentina elites to Miami banking are sufficiently strong that the dollar is clearly more focal, even though the EU trades with Argentina more than the U.S. does.
Friday assorted links
2. Sweden is near the top for wealth inequality (ho hum).
3. School vouchers in Arizona and elsewhere (NYT).
4. State opens commercial fishing on the Kuskokwim River to one person.
5. Prenda and the evolution of home schooling.
6. What do the vexillologists have to say? (NYT) Most of all, about Utah.
7. Una galleta pequeña de Argentina (with subtitles).
8. More on India and female labor force participation (WSJ).
Speeding up Science
Writing in the Washington Post, Heidi Williams has good suggestions for making the NIH and NSF move faster. Namely:
- Give the NIH the option to bypass peer review, as can the NSF.
- Give the NSF the option to “desk-reject”, as can the NIH.
- Give the NIH and the NSF more authority to fund scientists and not just projects.
Straightforward, actionable reforms that have a good chance of being implemented.
Read the whole thing for justification, details and background.
When does the quality premium disappear?
I have been pondering the world of classical music once again, mostly because of two new releases. One is the late Beethoven string quartets by the Calidore Quartet, and the other is a six-CD Chopin box by Jean-Marc Luisada.
The most striking feature of these recordings is that they are as good as any in the case of the Beethoven, and top tier for the Chopin (yes I have heard Rubinstein, Horowitz playing Chopin live, Cortot, Dinu Lipatti, Bolet playing Chopin live, I know how to spell Krystian Zimerman, as for the Beethoven the Busch Quartet, Quartett Italiano, Alban Berg, Gewandhaus, Danish Quartet, and much more!)
A second striking feature of the status quo is that hardly anyone seems to have heard of these performers. Luisada has a Wikipedia article, but there don’t seem to be full-length profiles of him. The Calidore Quartet has a slightly longer Wikipedia article, but again there is no serious coverage of him on line. Hardly anyone has heard of them, and their releases will at best sell a few hundred copies.
I don’t think any people deny the quality of these offerings, though they may disagree on the exact nature of the superlatives to offer. The point is that few people care. Furthermore, few people care that few people care.
Still, I wonder…can there be other markets where there is so much quality available that the quality premium goes away? Note that in these equilibria, most customers are not listening to the very highest quality products, rather they may choose the products associated with greater celebrity (which typically are still very good though not the very best).
If all goes well in the world (ha), is this where ideas markets end up?
How about markets for Sichuan food? How many people really care about the very very best ma la?
Clearly the 18th century was very different. Adam Smith and David Hume were much, much better than virtually all of their contemporaries, and they reaped a high quality premium, at least in terms of fame, influence, and longevity.
What exactly makes the quality premium go away or dwindle?
Do we prefer a world with a lower quality premium, yet is such a world also bound to disappoint us morally?
Diogo Costa on Brazil
From my email, via Gonzalo Schwartz:
The country ranks third globally in consuming information via digital platforms, a landscape that cultivates distrust in public institutions and ignites social unrest. This has fostered a rise in right-wing populism, including the election of former president Jair Bolsonaro, intensifying what Martin Gurri describes as a ‘crisis of authority.’ Efforts to counter this crisis, however, further destabilize Brazil’s democracy.
Supreme Court Justice Alexandre de Moraes exemplifies this turmoil with his controversial measures, including arbitrary digital content removal, ousting elected officials, and implementing unprecedented surveillance. Moraes and his peers have been criticized for investigating entrepreneurs and freezing assets over alleged anti-democratic private messages, probing executives from Google and Telegram for supposed disinformation campaigns, revoking passports of foreign-based journalists, and censoring a film about then-president Jair Bolsonaro.
The government’s endorsement of these measures amplifies the crisis. It has established a “National Attorney’s Office for the Defense of Democracy” to combat disinformation, while introducing a contested “fact-checking” platform. The Federal Prosecutor’s Office recently requested user data from followers of former President Jair Bolsonaro across major social media platforms to aid their investigation into anti-democratic activities.
Two key anti-corruption figures, Senator Sergio Moro, an ex-judge, and Representative Deltan Dallagnol, a former prosecutor, are under increased political assault. Accused of colluding in past investigations, they now face political retribution. Dallagnol has already been ousted from Congress by Brazil’s electoral court, and many speculate that Moro will follow suit. Their plight was summed up by President Lula’s statement, “I will only feel well when I f*ck with Moro”.
These high-profile cases are emblematic of a broader collapse of Brazil’s anti-corruption efforts. Initiatives like Operation Car Wash, which reclaimed R$3.28 billion out of R$6.2 billion in misappropriated funds, are now being undermined by political backlash. This underscores the urgent need for robust institutions that can effectively combat corruption without succumbing to political pressure.
Brazil’s circumstances resonate regionally due to its leadership role. As Ian Bremmer recently stated, commenting on the Supreme Court making former president Jair Bolsonaro ineligible for the next eight years, “Brazil [is] setting the standard for U.S. democracy”. This political meddling could influence other countries, potentially eroding the rule of law in other democracies.
Strengthening Brazil’s commitment to the rule of law transcends national borders — it’s a regional imperative. The advantages span from curbing corruption to advancing large infrastructure projects unimpeded by interference, as well as bolstering economic relationships given Brazil’s significant role in regional trade.
Thursday assorted links
1. McCartney and Starr will re-record “Let It Be,” along with Peter Frampton, Mick Fleetwood, and Dolly Parton. Can we have Carnival of Light now, please?
2. Ecuador is deteriorating (NYT).
4. Massive influx of Chinese into ride-hailing jobs.
5. The story of Ozempic (NYT).
6. A directory of Date Me docs. What are the meta-lessons from these?