That was then, this is now — the culture that is Swiss edition
Tocqueville’s notes on the Swiss constitution confirm the poor impression he had quickly formed. There were cantons, he remarked, but no Switzerland. In most of these, he continued, the majority of people lacked any sense of “self-government”; the Swiss habitually abused freedom of the press; they saw associations much as the French did, as a revolutionary means rather than as “a slow and quiet way to arrive at the rectification of wrongs”; they had no sense of the benefits derived from “the peaceful and legal introduction of the judge into the domain of politics”; and, finally, “at the bottom of their souls the Swiss show no deep respect for law, no love of legality, no abhorrence of the use of force, without which there cannot be a free country.”
That is from Jeremy Jennings, Travels with Tocqueville: Beyond America, a new and excellent book that I will be covering again soon.
The economic impact of AI
That is the topic of my latest Bloomberg column, here is part of my argument:
I am a believer in the power of current AI trends. But a look at the way economies work argues for more moderate (but still substantial) estimates of AI’s impact. The most likely scenario is that economic growth will rise by a noticeable but not shocking amount.
Economic historians typically cite Britain’s England’s Industrial Revolution as the single most significant development ever in boosting living standards. Through the late 18th and 19th centuries, it took people from a near-subsistence existence to modern industrial society.
Yet economic growth rates during the Industrial Revolution were hardly astonishing. From 1760 to 1780, often considered a “take-off” period, annual British growth was about 0.6%. The strongest period was 1831 to 1873, when annual growth averaged about 2.4% — a very good performance, but “revolutionary” only if sustained over longer periods of time.
The important feature of the Industrial Revolution, of course, is that growth did continue for decades, and thus living standards did not regress. But it was not possible to move quickly to an advanced industrial economy. For each step along the way, a lot of surrounding infrastructure and social practices had to be put into place. A profitable steel factory may require a nearby railroad, for instance, and an effective railroad in turn requires agreement on compatible gauges and equipment, and all these numerous decisions take a long time to sort out. There are always bottlenecks, and there is no simple way to fast forward through the entire process.
One way to estimate the impact of AI on economic growth is to look at all the human intelligence brought into the global economy by the social and economic development of Korea, China, India and other regions. There are many more potential innovators and researchers in the world, and the market for innovation is correspondingly larger. Yet all that new human intelligence does not seem to have materially boosted growth rates in the US, which on average were higher in the 1960s than in more recent times. All that additional talent is valuable — but getting stuff done is just very difficult.
I owe that latter point to The Wisdom of Garett Jones, though I could not find the Twitter link. And then:
My best guess, and I do stress that word guess, is that advanced artificial intelligence will boost the annual US growth rate by one-quarter to one-half of a percentage point. That is nothing to sneeze at: Consider that US per capita income is currently approaching $80,000. If it grows at 2% a year, in 50 years that figure will be almost $215,000. Alternatively, if the economy grows at 2.5% a year, it will be almost $275,000 — a substantial difference, and with compound returns that gap widens with time.
In the shorter run, that difference in growth rates could mean the difference between an easy path forward vs. a looming fiscal crisis and big tax increases. It could mean a world where most cancers are cured in 30 years, rather than 70 or 80. It’s possible to recognize the importance of those developments for human well-being, while still understanding that most of GDP is a huge lump of goods and services, most of whose production cannot be revolutionized quickly, no matter how much intelligence (artificial or otherwise) is available.
Finally:
None of those estimates should be taken to suggest that AI development will be anything less than hugely impressive over the next few decades. But as one set of constraints is relaxed — in this case access to intelligence — the remaining constraints will matter all the more. Regulatory delays will be more frustrating, for instance, as they will be holding back a greater amount of cognitive horsepower than in times past. Or as AI improves at finding new and better medical hypotheses to test, the lags and delays in systems for clinical trials will become all the more painful. In fact they may worsen as the system is flooded with conjectures.
I should note also that there is nothing else on the horizon likely to boost growth more than AI will.
Albania (Italy) fact of the day
Attracted by its Mediterranean beaches at competitive prices, airline passengers to Albania more than doubled in June compared with the same period a year earlier, according to ACI Europe, an association of airport operators. The opening of low-cost routes to Albanian airports contributed to that jump, ACI said.
Overnight stays also increased, with Eurostat’s latest figures showing 261,000 nights spent by foreign tourists in Albania in the first quarter, up 152 per cent from the same period in 2019.
Travel to Italy has not yet returned to pre-pandemic levels. Here is the full FT story.
Wednesday assorted links
*War and Punishment*
The author is Mikhail Zygar, and the subtitle is Putin, Zelensky, and the Path to Russia’s Invasion of Ukraine. I have to tell you the subtitle put me off and I nearly didn’t buy this one, as too many books in this area repeat the same (by now) old material. But after some extensive scrutiny in Daunt Books, I decided it was for me. And I was right. It is by far the best book on the origins of the war, both historical and conceptual, and for that matter it gives the literary history as well. Here is one excerpt:
…the Clinton administration’s approach is even blunter: Washington will not discuss anything with Kyiv until Ukraine gives up its Soviet-inherited nuclear arsenal: 176 intercontinental ballistic missiles, able to carry 1,272 nuclear warheads and 2,500 tactical nuclear weapons. True, Ukraine cannot actually fire them: all the control systems are located in Russia. But Clinton and his diplomats echo the same mantra: any economic aid to Ukraine is contingent on all nuclear weapons being relocated to Russia. Kravchuk tries to resist, demanding compensation and security guarantees, in return. In the end, Kravchuk gets the promises he wants.
Among many other sections, I enjoyed the discussion of how revolutionary the 1770s were:
But an even more transformative decade is the 1770s, which sees the birth of the global political and geographical structure as we know it today, the start of the Industrial Revolution, and the laying of the foundations of the modern economy. James Watt invents the steam engine; Adam Smith writes An Inquiry into the Nature and Causes of the Wealth of Nations; Captain James Cook reaches the shores of Australia and New Zealand. Curiously at the same time a new type of political confrontation emerges — the struggle not for one’s homeland or monarch but also abstract values. It is the 1770s that give rise to both populism and the liberal idea.
Definitely recommended, this will make my best non-fiction of the year list.
What I’ve been reading
Maria Blanco and Alberto Mingardi have produced a very useful volume, Show and Biz: The Market Economy in TV Series and Popular Culture (2000-2020), providing an updated look at the (somewhat) rising popularity of business and capitalism in U.S. popular culture.
David O’Brien, Exiled in Modernity: Delacroix, Civilization, and Barbarism. A very good book planting Eugene Delacroix — both his paintings and writings — squarely in a “progress studies” tradition. Like so much other 19th (and also 18th) century art. Good color plates too.
Andrea Dworkin, Right-Wing Women. Do you judge books by their degree of insight, or based on whether you agree with where they end up? This volume is a litmus test for that question, and I give it either an A or an F minus, depending on your standard. In my view, Dworkin remains an underrated and intellectually honest (if overly consistent) feminist thinker. This one is from 1978, still interesting albeit repulsive if you try to apply any moral judgment to it. But don’t! If you are looking for reductios in support of reactionary points of view, this is the best place to start. Better yet is to drop all the consistency requirements and end up somewhere in between.
Simon Shorvon, The Idea of Epilepsy: A Medical and Social History of Epilepsy in the Modern Era (1860-2020). A remarkably thorough and intelligent treatment of a topic that now has a near-perfect stand-alone book.
There is Alan S. Kahan, Freedom from Fear: An Incomplete History of Liberalism.
And Michael J. Bonner, In Defense of Civilization: How Our Past Can Renew Our Present.
Vikash Yadav, Liberalism’s Last Man: Hayek in the Age of Political Capitalism.
Seth D. Kaplan, Fragile Neighborhoods: Repairing American Society, One Zip Code at a Time, forthcoming in October.
Market depletion and the income of doctors
Rural regions rule the doctor rankings: Alaska, Wyoming and Nebraska join the Dakotas in the top five states for physician pay, confounding the intuition hammered into our souls by more than a decade of covering economics. None of those are high-earning states overall, with the evergreen exception of Alaska. They’re also not high-cost: North and South Dakota rank 41st and 45th, respectively, in cost of living among the states and D.C.; only Alaska costs more than average, according to the Bureau of Economic Analysis.
Of course the highest-paid lawyers do not live in the Dakotas. Do note this:
Rural America has about 20 percent of the U.S. population but about 10 percent of its doctors, according to our analysis of Census Bureau data. So the talented young physicians willing to hang their shingles in North Dakota don’t have to worry about rivals undercutting their prices. They can charge more for everything, from appendectomies to vasectomies.
Here is more from Andrew Van Dam.
Tuesday assorted links
1. Stuart Buck offers a partial history of meta-science.
2. Heidi Williams in WaPo on speeding up science funding.
3. Two economists from Argentina discuss the electoral results (in Spanish).
4. “Saudi Arabia and the United Arab Emirates are buying up thousands of the high-performance Nvidia chips crucial for building artificial intelligence software, joining a global AI arms race that is squeezing the supply of Silicon Valley’s hottest commodity.” (FT) China is involved too.
What makes for a good Royal Navy senior officer?
In most studies of talent, it is very difficult to get the top performers to respond or offer data. This paper is a major exception to that general limitation:
This paper assesses the impact of general intelligence, as well as specific personality traits, and aspects of motivation, on performance, potential, and advancement of senior leaders. A questionnaire survey was conducted on the full population of 381 senior officers in the Royal Navy with an 80% response rate. Performance, potential, and rate of advancement were established direct from the organization’s appraisal system; intelligence, personality traits and motivation were assessed, at the time of the study, using the Verify G+ Test, Occupational Personality Questionnaire, and Motivation Questionnaire. Findings suggest differences in motivation are more important than differences in general intelligence, or personality traits, in predicting assessed performance, potential within, and actual rate of advancement to, senior leadership positions. This is a rare example of a study into very senior leaders, validated against both formal appraisal data and actual rates of advancement. As a consequence of this study the Royal Navy has started to use psychometric-based assessments as part of the selection and development of its most Senior Officers.
Here is the full (gated) paper by Mike Young and Victor Dulewicz. I’ll pull out and repeat the key sentence there: “Findings suggest differences in motivation are more important than differences in general intelligence, or personality traits, in predicting assessed performance, potential within, and actual rate of advancement to, senior leadership positions.“
The economics of the UPS delivery deal
That is the topic of my latest Bloomberg column, here is the lead fact:
By the end of the five-year deal that the United Parcel Service and its drivers just agreed to, full-time drivers will make about $170,000 a year, counting health-care coverage and other benefits.
Sam Bowman, telephone! And some further analysis:
It is all too common to decry the excessive profits of big business and root for higher wages for workers. But in reality, big business is more likely to bring about higher wages.
That said, countervailing forces will limit the distribution of worker gains. For instance, UPS package volumes have been dropping for several quarters, in part because pandemic-induced demand has fallen considerably. So don’t expect UPS to be hiring a lot more drivers, which probably made it easier for it to be so generous.
Going forward, UPS might also be expected to lose some market share. Amazon shipping already has been gaining at UPS expense, and that trend is now more likely to continue. The relevant Amazon workers are not unionized and are paid lower wages. In any case, if self-driving delivery trucks were just around the corner — metaphorically of course — then UPS probably would not have agreed to this package.
UPS can also claw back some of the worker gains by how it rations the driver jobs. Before they can drive, workers first must accept lower-paid jobs sorting and loading packages, a quasi-apprenticeship that can last for several years. That too is economics at work. That upfront deal also might worsen over time. After it was announced, one online jobs board saw searches for UPS driver openings rise about 50%. Higher demand may allow UPS to be pickier about hiring, and to offer lesser terms to loaders and sorters.
I expect the talent drain from academic life to increase.
Monday assorted links
2. Who benefits from Ex-Im Bank aid?
3. David Brooks on why Americans have become so mean (Atlantic).
5. Vitalik Buterin on the Seen and Unseen podcast, run by Amit Varma and with guest co-host Ajay Shah, about 3.5 hours.
Argentina update, canine Mastiff edition
A far-right libertarian candidate won Argentina’s open presidential primary election on Sunday, a surprising showing for a politician who wants to adopt the U.S. dollar as Argentina’s official currency and embraces comparisons to Donald Trump.
Javier Milei, 52, a congressman, economist and former television pundit, secured 30 percent of the vote with 96 percent of the ballots counted, making him the front-runner for the presidency in the fall general election.
Polls had suggested that Mr. Milei’s support was at about 20 percent, and political analysts had predicted that his radical policy proposals — including abolishing the country’s central bank — would prevent him from attracting many more voters…
Mr. Milei has pitched himself as the radical change that the collapsing Argentine economy needs, and he could be a shock to the system if elected. Besides his ideas about the currency and the central bank, he has proposed drastically lowering taxes and cutting public spending, including by charging people to use the public health care system; closing or privatizing all state-owned enterprises; and eliminating the health, education and environment ministries…
He then thanked his sister, who runs his campaign, and his five Mastiff dogs, each named after a conservative economist.
Here is the full NYT story, and one dog is named after Milton Friedman, one for Murray Rothbard, and two for Robert Lucas, another being named after Conan. All are clones of the same underlying dog.
I thank MN for the pointer.
The WV Canary in the Coal Mine
West Virginia University has announced a preliminary plan to cut 7% of its faculty and 9% of its majors:
Among the programs recommended for discontinuance, World Languages including all 32 faculty positions. WVU is also recommending the elimination of several programs in the College of Creative Arts, graduate programs in higher education administration and special education.
On twitter there is a lot of bemoaning about the importance of languages but the students are voting with their feet. Indeed, most of these programs are only sustained by foreign language requirements which are increasingly otiose in a world with ubiquitous instant translation. The students are correct, the value of learning a second language has fallen.
Where the ax should fall may be debatable but the ax must fall somewhere because of demographics. College enrollment peaked in 2010 and has since fallen by 15%. What’s going on in WV is thus a reflection of national trends, magnified by West Virginia’s own decline in population. Full paying foreign students from China are also way down. Now add to declining college demographics, budgets hit by the great recession and then the pandemic. Now add in the rise of online learning which means that universities can outsource low-demand classes to other universities and save money and quite likely increase quality. (Indeed, the local teacher might have been teaching online anyway so why not substitute with a world expert and great teacher who has the backing of an entire team of delivery experts?) Finally, add in the fact that a substantial part of the electorate would like to see a decline in programs they see as politicized.
Put it all together and the only surprise is how long it has taken for the ax to fall. You can be sure, however, that there is more chopping to be done.
Public school choice programs in Los Angeles
Does a school district that expands school choice provide better outcomes for students than a neighborhood-based assignment system? This paper studies the Zones of Choice (ZOC) program, a school choice initiative of the Los Angeles Unified School District (LAUSD) that created small high school markets in some neighborhoods but left attendance-zone boundaries in place throughout the rest of the district. We study market-level impacts of choice on student achievement and college enrollment using a differences-in-differences design. Student outcomes in ZOC markets increased markedly, narrowing achievement and college enrollment gaps between ZOC neighborhoods and the rest of the district. The effects of ZOC are larger for schools exposed to more competition, supporting the notion that competition is a key channel. Demand estimates suggest families place substantial weight on schools’ academic quality, providing schools with competition-induced incentives to improve their effectiveness. The evidence demonstrates that public school choice programs have the potential to improve school quality and reduce neighborhood-based disparities in educational opportunity.
That is from a new NBER working paper by Christopher Campos and Caitlin Kearns. Oh how underrated school choice programs were five to ten years ago!
Impact of major awards on the subsequent work of their recipients
To characterize the impact of major research awards on recipients’ subsequent work, we studied Nobel Prize winners in Chemistry, Physiology or Medicine, and Physics and MacArthur Fellows working in scientific fields. Using a case-crossover design, we compared scientists’ citations, publications and citations-per-publication from work published in a 3-year pre-award period to their work published in a 3-year post-award period. Nobel Laureates and MacArthur Fellows received fewer citations for post- than for pre-award work. This was driven mostly by Nobel Laureates. Median decrease was 80.5 citations among Nobel Laureates (p = 0.004) and 2 among MacArthur Fellows (p = 0.857). Mid-career (42–57 years) and senior (greater than 57 years) researchers tended to earn fewer citations for post-award work. Early career researchers (less than 42 years, typically MacArthur Fellows) tended to earn more, but the difference was non-significant. MacArthur Fellows (p = 0.001) but not Nobel Laureates (p = 0.180) had significantly more post-award publications. Both populations had significantly fewer post-award citations per paper (p = 0.043 for Nobel Laureates, 0.005 for MacArthur Fellows, and 0.0004 for combined population). If major research awards indeed fail to increase (and even decrease) recipients’ impact, one may need to reassess the purposes, criteria, and impacts of awards to improve the scientific enterprise.
That is from a newly published paper by Andrew Nepomuceno, Hilary Bayer, and John P.A. Ioannidis, via Michelle Dawson.