The efficiency of counterfeiting in 19th century Peru
“The counterfeiter probably didn’t realize that that coin didn’t exist,” Dr. Ortega said.
He said that an influx of low-value coinage would have been welcomed in Peru at the dawn of the 20th century. The country’s economy was reeling from the recent War of the Pacific, and the government was focusing on printing larger-denomination paper bank notes to pay off international loans; in 1899, the Lima Mint produced roughly one-tenth the number of silver coins it produced just five years earlier.
As a result, people in Peru were using coins from neighboring nations or even cutting their own country’s coins in half to conduct small transactions. “Counterfeiters found a field of opportunity,” Dr. Ortega said.
Here is more from Katherine Kornei at the NYT, mostly about finding an old coin that should not exist and cannot be traced.
Thursday assorted links
1. Claims about the Russian defense sector.
2. South Korea to ban dog meat.
3. Microsoft debates what to do with AI lab in China, perhaps EAers should discuss this more? (NYT) EA is right about many issues, but for far too long foreign policy has been a weak suit of the philosophy. And here is U.S. companies talking to China about AI safety (FT).
4. Johor Bahru metro concept map. And “Malaysia and Singapore agreed to jointly develop a special economic zone and explore a range of measures including passport-free travel to boost trade between the neighbors that each count the other as the No. 2 trading partner.” (Bloomberg, this has been a longstanding prediction of mine).
Hester Peirce on the SEC
As she did on the LBRY case (n.b. I was a LBRY advisor), SEC Commissioner Hester Peirce released a statement about the failings of the SEC with regards to the recently approved Bitcoin spot ETPs. It’s rare to read something this brutal coming from the inside.
We squandered a decade of opportunities to do our job. If we had applied the standard we use for other commodity-based ETPs, we could have approved these products years ago, but we refused to do so until a court called our bluff.
…Today’s order does not undo the many harms created by the disparate treatment of spot bitcoin products.
First, our arbitrary and capricious treatment of applications in this area will continue to harm our reputation far beyond crypto. Diminished trust from the public will inhibit our ability to regulate the markets effectively. This saga will taint future interactions between the industry and our staff and will dampen the rich, informative dialogue that best protects investors.
Second, our disproportionate attention on these filings has diverted limited staff resources away from other mission critical work. Over ten years, likely millions of dollars of staff time has gone toward blocking these applications.
Third, our actions here have muddied people’s understanding of what the SEC’s role is. Congress did not authorize us to tell people whether a particular investment is right for them, but we have abused administrative procedures to withhold investments that we do not like from the public.
Fourth, by failing to follow our normal standards and processes in considering spot bitcoin ETPs, we have created an artificial frenzy around them. Had these products come to market in the way other comparable products typically have, we would have avoided the circus atmosphere in which we now find ourselves.
Fifth, we have alienated a generation of product innovators within our space. Our unreasonable approach to these applications has signaled that regulatory prejudice against new products and services can lead us to sidestep the law and unreasonably delay product launches. The industry has logged hundreds of meetings, has filed submissions, withdrawals and amendments, and ultimately had to resort to a costly legal battle to get us to today.
Although this is a time for reflection, it is also a time for celebration. I am not celebrating bitcoin or bitcoin-related products; what one regulator thinks about bitcoin is irrelevant. I am celebrating the right of American investors to express their thoughts on bitcoin by buying and selling spot bitcoin ETPs.[10] And I am celebrating the perseverance of market participants in trying to bring to market a product they think investors want. I commend applicants’ decade-long persistence in the face of the Commission’s obstruction.
*Sound of Freedom*
I enjoyed watching this somewhat controversial production. In terms of quality, think of it as comparable to a very good made-for-TV movie. The political message, that we don’t worry enough about sex trafficking of minors is I think mostly correct, though I would not buy most of the baggage that in today’s world so often comes with that view. The cinematography of Latin America is very good, and interestingly this movie has an easier time feeling “genuinely international” than do most Hollywood productions. The opening scene is set in Tegulcigalpa, Honduras. Here is some useful background on the movie. I am happy to see a film showcasing freedom and presenting slavery as a complete negative.
Department of Uh-Oh, economic research edition
We assess statistical power and excess statistical significance among 31 leading economics general interest and field journals using 22,281 parameter estimates from 368 distinct areas of economics research. Median statistical power in leading economics journals is very low (only 7%), and excess statistical significance is quite high (19%). Power this low and excess significance this high raise serious doubts about the credibility of economics research. We find that 26% of all reported results have undergone some process of selection for statistical significance and 56% of statistically significant results were selected to be statistically significant. Selection bias is greater at the top five journals, where 66% of statistically significant results were selected to be statistically significant. A large majority of empirical evidence reported in leading economics journals is potentially misleading. Results reported to be statistically significant are about as likely to be misleading as not (falsely positive) and statistically nonsignificant results are much more likely to be misleading (falsely negative). We also compare observational to experimental research and find that the quality of experimental economic evidence is notably higher.
That is from a new paper by Zohid Askarov, Anthony Doucouliagos, Hristos Doucouliagos, and T. D. Stanley.
Via my colleague Jonathan Schulz.
Are chatbots better than we are?
Maybe so:
We administer a Turing Test to AI Chatbots. We examine how Chatbots behave in a suite of classic behavioral games that are designed to elicit characteristics such as trust, fairness, risk-aversion, cooperation, \textit{etc.}, as well as how they respond to a traditional Big-5 psychological survey that measures personality traits. ChatGPT-4 exhibits behavioral and personality traits that are statistically indistinguishable from a random human from tens of thousands of human subjects from more than 50 countries. Chatbots also modify their behavior based on previous experience and contexts “as if” they were learning from the interactions, and change their behavior in response to different framings of the same strategic situation. Their behaviors are often distinct from average and modal human behaviors, in which case they tend to behave on the more altruistic and cooperative end of the distribution. We estimate that they act as if they are maximizing an average of their own and partner’s payoffs.
That is from a recent paper by Qiaozhu Mei, Yutong Xie, Walter Yuan, and Matthew O. Jackson. Via the excellent Kevin Lewis.
Wednesday assorted links
1. Donation suggestions for economic growth.
3. Tiny homes in Austin (NYT).
4. Casey Handmer on alleviating water scarcity in the US Southwest.
5. Using an LLM as your operating system? And the video is here, I have been predicting this.
6. Hillsdale College update (NYT).
Back to the Future: Power Dishwashers!
Why do today’s dishwashers typically take more than 2 hours to run through a normal cycle when less than a hour was common in the past? The reason is absurd energy and water “conservation” rules. These rules, imposed on dish and clothes washers, have made these products perform worse than in the past, cleaning less well or much more slowly. One of the best things that the Trump administration did (other than Operation Warp Speed, of course) was creating a product class–superwashers!–that cleaned in under an hour and were not subject to energy and water conservation standards. The Biden administration reversed these rules but the 5th circuit just ruled that the reversal was “arbitrary and capricious.”
The ruling notes
…the record contains historical evidence that dishwasher cycle time has increased from around one hour at the advent of DOE’s conservation program to around two and a half hours in 2020. See CEI Petition, 83 Fed. Reg. at 17773–74. DOE does not appear to contest this data; in fact, DOE in 2020 appeared to agree that the frustratingly slow pace of modern dishwashers caused consumer substitution away from dishwashers and toward handwashing. See 2020 Dishwasher Rule, 85 Fed. Reg. at 68729; see also Record App’x 3 (noting consumers supported efficacious dishwashers by a margin of 2,200 to 16). And nothing wastes water and energy like handwashing: DOE itself estimated in 2011 that handwashing consumes 350% more water and 140% more energy than machine washing. See Record App’x 5 (citing U.S. Dep’t of Energy, Technical Support Document Docket EE-2006-STD-0127: National Impact Analysis 16 (2011), https://perma.cc/849K-NCX8).
…What did DOE say in response? Basically nothing: It acknowledged the concern and moved on. But bare acknowledgment is no substitute for reasoned consideration.
…the Repeal Rule is arbitrary and capricious for two principal reasons. (1) It failed to adequately consider appliance performance, substitution effects, and the ample record evidence that DOE’s conservation standards are causing Americans to use more energy and water rather than less. (2) It rested instead on DOE’s view that the 2020 Rules were legally “invalid”—but even if true, that does not excuse DOE from considering other remedies short of repealing the 2020 Rules in toto.
More generally AnechoicMedia on twitter wrote:
Water usage restrictions on home dishwashers are a complete non-issue from an environmental standpoint and our inability to overthrow this petty regime is why this country sucks. You cannot provide abundance and prosperity while retaining this wartime rationing mindset.
A position with which I wholeheartedly agree.
Political business cycle theory has been neutered
Probably not forever, but we are living in strange times:
Now the theory needs major revision. Political leaders still wish to manipulate economic variables in their favor, of course. But economies, as well as voters, are not going along — and so the standard mechanisms for political business cycle theory are broken…
Under political business cycle theory, this [the IRA] should have helped Biden win favor with voters. Yet it has not worked out that way. Biden’s approval ratings remain anchored at all-time lows — whether these are justified is a separate question — and meanwhile a lot of the money is being spent on manufacturing in red states that Biden is unlikely to win. In political terms, a very large dose of fiscal policy just doesn’t seem to have helped.
Political business cycle theory also implicitly predicted that the Fed would be reluctant to pursue disinflation over the last year, for fear of inducing a recession and damaging re-election prospects for incumbents. The Fed proceeded in any case, even though its staff (incorrectly) expected a recession.
In economic terms as well, fiscal policy is less effective today than in it has been in the past. Many countries have higher debt and deficit levels, which raises the risk of short-run crowding out of private investment. And labor markets in many countries are tight, which limits the ability of fiscal policy to boost employment.
The world’s most radical economic plan currently belongs to President Javier Milei of Argentina. Milei explicitly campaigned on a platform of taking away benefits and limiting the number of commitments the government makes. He is now trying to carry out those promises, even though voters may not like the results. Nonetheless he has cast his lot in opposition to the “free lunch” mentality.
There is much more in the rest of my Bloomberg column.
Emergent Ventures, 31st cohort
Clayton Haight, Waterloo, robotics and accelerating progress in hardware.
Hemanth Surya Ganesh, freshman at Dickinson College, also India, longevity research and general career support.
Lisa Wehden and Minn Kim. Plymouth accelerates innovation through faster and more transparent immigration services.
Pranav Konjeti, Richmond, VA, high school, to build out a web site on extracurricular activities.
Neel Redkar, UCLA, artificial photosynthesis.
Kevin Liu, Vancouver, cybersecurity.
Julie R. Vaughn, Cambridge, Mass., to study delaying menopause and epigenetic reproductive aging measures.
Grace Sodunke, Oxford, AI and general career development.
Anirudh Bharadwaj Vangara, with co-founder Hetav Patel, Toronto. Sophomores in high school, to build a semantic search engine to match students with internship and other opportunities.
John Ervin Caldemeyer, UCLA, to translate Juan Marsé into English.
T.G. Hegarty, Cork, for on-line math education and Breakthrough Maths.
Elly Shin, San Francisco, formerly of Loyal, to research the possibility of extending menopause.
Harry O’Connor, Cork, Ireland, 17, robotics.
Mark Halka, Waterloo, robotics and robotic arms.
Ukraine cohort:
Kyiv School of Economics and Tymofiy Mylovanov, repeat winners, to support and cultivate talent in Ukraine.
Taisiia Karasova, AstroSandbox, to help sponsor the Ukrainian National internet-Olympiad on Astronomy.
Congratulations to all, and yes there are still more winners to be listed (I do these in batches). Here are lists of previous Emergent Ventures winners.
A Systematic Review and New Analyses of the Gender-Equality Paradox
Contrary to what some naysayers might claim, the paradox is real:
Some studies show that living conditions, such as economy, gender equality, and education, are associated with the magnitude of psychological sex differences. We systematically and quantitatively reviewed 54 articles and conducted new analyses on 27 meta-analyses and large-scale studies to investigate the association between living conditions and psychological sex differences. We found that sex differences in personality, verbal abilities, episodic memory, and negative emotions are more pronounced in countries with higher living conditions. In contrast, sex differences in sexual behavior, partner preferences, and math are smaller in countries with higher living conditions. We also observed that economic indicators of living conditions, such as gross domestic product, are most sensitive in predicting the magnitude of sex differences. Taken together, results indicate that more sex differences are larger, rather than smaller, in countries with higher living conditions. It should therefore be expected that the magnitude of most psychological sex differences will remain unchanged or become more pronounced with improvements in living conditions, such as economy, gender equality, and education.
That is from a new piece by Agneta Herlitz, Ida Hönig, and Martin Asperholm. Via excellence.
Tuesday assorted links
Rashid Khan, RIP
Stranded Technologies podcast
With Niklas Anzinger of Próspera, partly about GOAT, partly about SEZs and charter cities.
What if you have a favorable AS shift and a negative AD shift?
The negative AD shift comes from the Fed’s extreme tightening plus the phasing out of fiscal stimulus. That might hurt housing markets the most, plus whatever consumers were wanting to spend their extra cash on (travel, restaurants?). It should hurt a lot of service sectors with sticky nominal prices quite a bit. And, we are told, that is quite a few sectors.
The positive supply shock comes from supply chains untangling, post Russian invasion, plus mopping up the residue from Covid restrictions. It shouldn’t help most service sectors very much, but a lot of manufactured goods, and resource-intensive goods, and agricultural foodstuffs should boom from this. Imports too, especially if they come by ship rather than by plane. Note that foreign trade is not a huge share of the American economy, though, and America is the world’s leading oil exporter. Falling energy prices may not help us much if at all, not in the aggregate.
You might think these dual shifts can, on net, work out for the better. Maybe. But part of the mix should be a fairly extreme volatility across sectors. You have a lot of service sectors that get hit hard from the negative AD shock and which don’t benefit so much from the supply chain untangling.
Is that what we see in the data? It seems most service sectors have done fine, and we’ve had a high degree of comovement, though I would note continuing issues in real estate markets and also in banking.
These days the Keynesians think you can get so much general positive comovement from the supply shocks resolving themselves — hilarious! For decades they have been criticizing the real business cycle theorists along those lines, and that was without a simultaneous major disinflation staring us in the teeth.
No one should be patting themselves on the back for having figured all this out.