Tom Lehrer, RIP
Sunday assorted links
From the comments, on language preferences
Those wanting good, efficient government are not doing so well this century.
That is from Paco. The rest of the comment is a bit more specific:
In Spain, language politics are a key way to get your friends government jobs: When you manage to make regional language proficiency mandatory on any of said jobs, from schoolteacher up, and make the regional language the only language schools will teach on, you basically get a political cleansing of the institutions. Catalonia also pays those people quite a bit better than other regions: Not good for the budget (although now they get to hand the debt to Spain while they keep the taxes!), but it’s great for clientelism. Love your region, speak your regional language over all, get rewarded economically.
This is why you have similar schemes in every region that can get away with it: It’s just jobs for your friends. But that also translates to worse English for everyone, a language that might actually help do better in the long run. They call it maintaining the culture, I call it grift.
Then we’ll hear them all complain about Madrid’s corruption, when the 3% “friend tax” on basically any catalonian government contract, or anything large that needed a permit was documented for decades. It’s a key disease all across Spain. Blaiming Madrid made great sense circa 1920s or 30s, where it was just a bureaucratic capital with no industry of any sort. But now it’s the largest economic engine of the nation, largely because they are the closest to an economically liberal area.
As for the economists, it’s easy: They are inclined to any pro-independent movement that claims oppression, for any reason. At that point that cause is on their team, and careful analysis disappears. I bet you can all find an example or two of people justifying the waste and corruption elsewhere, just due to association.
Daunt tote bags as status symbols
Her husband, Jimmy, is carrying the blue tote bag through Victoria Park Village, where three other Daunt totes bags are spotted within a 20-minute window despite there being no store nearby.
Locality doesn’t matter. “I have a friend with a bookshop in Italy who follows Daunt Books on Instagram so I gave her a spare from my collection. She was so excited,” Marta Timoncini said. At 50, she says she is “too old to make a fashion statement” but simply thinks the design is nice and enjoys the secret pocket to hold her phone. She also said she likes to flaunt her love of her beloved store.
She is perhaps an outlier. A team member at the Broadway store for Jimmy Fairly said people come in just to buy the tote bag, which is free with every purchase, but costs £20 on its own. The shop is capitalising on the frenzy, selling limited-edition summer and winter versions.
The tote is another success story of virality: people walk around trendy London hotspots and hawk-eyed trend watchers satirise them in meme pages on social media. “That’s when I knew we had made it. We are cool now, it is viral, that is amazing,” the team member said.
Here is more from the Times of London, also covering Trader Joe’s tote bags as a status symbol. I now own about twenty-five of these bags? Via Rebecca Lowe.
Claims about DOGE and AI
The tool has already been used to complete “decisions on 1,083 regulatory sections” at the Department of Housing and Urban Development in under two weeks, according to the PowerPoint, and to write “100% of deregulations” at the Consumer Financial Protection Bureau (CFPB). Three HUD employees — as well as documents obtained by The Post — confirmed that an AI tool was recently used to review hundreds, if not more than 1,000, lines of regulations at that agency and suggest edits or deletions.
Here is the full story, I will keep you all posted…
Saturday assorted links
China kindergarten fact of the day
The number of children in Chinese kindergartens has fallen by a quarter in four years, prompting the closure of tens of thousands of preschools in the country as a precipitous drop in births hits the education system.
Enrolments in China’s kindergartens have declined by 12mn children between 2020 and 2024, from a peak of 48mn, according to data from the country’s ministry of education. The number of kindergartens, serving Chinese children aged 3-5, has also fallen by 41,500 from a high of nearly 295,000 in 2021.
Here is more from the FT.
Should Catalonia receive more financial independence?
Jesús details how Spain already operates one of the most decentralized fiscal systems in the world, “more latitude than most U.S. states,” he notes, yet Catalonia now seeks the bespoke privileges long enjoyed by the Basque Country and Navarra. The Regional Authority Index rates how much self‑rule and shared rule each country’s sub‑national governments actually wield. In its last update the index places Spain as the most decentralized unitary state in the sample and fourth overall among 96 countries.
Those northern provinces collect every euro on their own soil and forward a modest remittance to the central treasury, a setup that Fernández‑Villaverde brands “a Confederate relic.” Extending it to Catalonia, he argues, would hollow out Spain’s common‑pool finances, deepen inter‑regional resentment and erode the principle of equal citizenship, while turning the national revenue service into little more than a mailbox for provincial checks.
That is from the episode summary of a podcast of Rasheed Griffith with Jesús Fernandez-Villaverde. On the Catalan language, matters look grim in any case:
Right now around only 55% of births in Catalonia are born from a mother that was born, actually not even Catalan, that was born in Spain. That basically tells you that only 40, 45%, perhaps even a little bit less of mothers that were born in Spain speak Catalan at home. At this moment, I will say that less than 30, 28% of kids born in Cataluña, perhaps even less, will speak Catalan at home.
It amazes me how many people ignore the reality that a host of leading economists led or endorsed a constitution-violating movement to separate Catalonia from the rest of Spain and not long ago. The podcast will tell you more. It is also interesting throughout, including on Spanish history since the 19th century.
Why does renovating the Fed cost so much?
Here is a good WSJ piece on that question. Excerpt:
For example, members of the fine arts commission in 2020 recommended that the Fed use more marble to better match the original buildings. The Fed had initially proposed using more glass in an effort to represent the Fed’s transparency, according to the commission’s meeting minutes. The Fed amended the design to incorporate more marble.
To be clear, I am fine with an unabashedly elitist approach to designing or redesigning a central bank building, at least provided one’s domestic politics is able to sustain such a thing. I am glad for instance that the Cleveland Fed is quite a nice building, and I wish more DC architecture were of comparable quality, noting that these days we are not very good at constructing Beaux Arts buildings, and for DC modernist styles do not always fit the surroundings very well, thus creating a broader dilemma.
Friday assorted links
USA fact of the day
You know what’s cool… a quadrillion tokens. We processed almost 1,000,000,000,000,000 tokens last month, more than double the amount from May.
That is from Demis Hassabis. And here is Demis discussing his own work schedule.
Horseshoe Theory: Trump and the Progressive Left
Many of Trump’s signature policies overlap with those of the American progressive left—e.g. tariffs, economic nationalism, immigration restrictions, deep distrust of elite institutions, and an eagerness to use the power of the state. Trump governs less like Reagan, more like Perón. As Ryan Bourne notes, this ideological convergence has led many on the progressive left to remain silent or even tacitly support Trump policies, particularly on trade.
“[P]rogressive Democrats like Senator Elizabeth Warren have chosen to shift blame for Trump’s tariff-driven price hikes onto large businesses. Last week, they dusted off—and expanded—their pandemic-era Price Gouging Prevention Act. While bemoaning Trump’s ‘chaotic’ on-off tariffs, their real ire remains reserved for ‘greedy corporations,’ supposedly exploiting trade policy disruption to pad prices beyond what’s needed to ‘cover any cost increases.’
…The Democrats’ 2025 gouging bill is broader than ever, creating a standing prohibition against ‘grossly excessive’ price hikes—loosely suggested at anything 20 percent above the previous six-month average—but allowing the FTC to pick its price caps ‘using any metric it deems appropriate.’
…Instead of owning the pricing fallout from his trade wars, President Trump can now point to Democratic cries of ‘corporate greed’ and claim their proposed FTC crackdown proves that it’s businesses—not his tariffs—to blame for higher prices.
If these progressives have their way, the public debate flips from ‘tariffs raise prices’ to ‘the FTC must crack down on corporate greed exploiting trade policy reform,’ with Trump slipping off the hook.”
Trump’s political coalition isn’t policy-driven. It’s built on anger, grievance, and zero-sum thinking. With minor tweaks, there is no reason why such a coalition could not become even more leftist. Consider the grotesque canonization of Luigi Mangione, the (alleged) murderer of UnitedHealthcare CEO Brian Thompson. We already have a proposed CA ballot initiative named the Luigi Mangione Access to Health Care Act, a Luigi Mangione musical and comparisons of Mangione to Jesus. The anger is very Trumpian.
A substantial share of voters on the left and the right increasingly believe that markets are rigged, globalism is suspect, and corporations are the real enemy. Trump adds nationalist flavor; progressives bring the regulatory hammer. The convergence of left and right in attacking classical liberalism– open markets, limited government, pluralism and the basic rules of democratic compromise–is what worries me the most about contemporary politics.
Partisan Bias in Professional Macroeconomic Forecasts
Here is a recent paper by Benjamin S. Kay, Aeimit Lakdawala, and Jane Ryngaert:
Using a novel dataset linking professional forecasters in the Wall Street Journal Economic Forecasting Survey to their political affiliations, we document a partisan bias in GDP growth forecasts. Republican-affiliated forecasters project 0.3-0.4 percentage points higher growth when Republicans hold the presidency, relative to Democratic-affiliated forecasters. Forecast accuracy shows a similar partisan pattern: Republican-affiliated forecasters are less accurate under Republican presidents, indicating that partisan optimism impairs predictive performance. This bias appears uniquely in GDP forecasts and does not extend to inflation, unemployment, or interest rates. We explain these findings with a model where forecasters combine noisy signals with politically-influenced priors: because GDP data are relatively more uncertain, priors carry more weight, letting ideology shape growth projections while leaving easier-to-forecast variables unaffected. Noisy information therefore amplifies, rather than substitutes for, heterogeneous political priors, implying that expectation models should account for both information rigidities and belief heterogeneity. Finally, we show that Republican forecasters become more optimistic when tax cuts are salient in public discourse, suggesting that partisan differences reflect divergent beliefs about the economic effects of fiscal policy.
Here is the SSRN link.
What should I ask George Selgin?
Yes, I will be having a Conversation with him, live at the Cato Institute on September 26th, here is some basic information:
Website: https://www.cato.org/events/false-dawn-new-deal-promise-recovery-1933-1947
Registration: https://register.cato.org/false-dawn-new-deal-promise-recovery-1933-1947/register
We will start with George’s new and excellent book False Dawn: The New Deal and the Promise of Recovery 1933-1947. But of course George has a long and distinguished record in monetary economics, free banking, macro, and ngdp ideas, as well as productivity norms for monetary policy.
So what should I ask him?
*The Economist* on the speed of AI take-off
A booming but workerless economy may be humanity’s ultimate destination. But, argues Tyler Cowen of George Mason University, an economist who is largely bullish about AI, change will be slower than the underlying technology permits. “There’s a lot of factors of production…the stronger the AI is, the more the weaknesses of the other factors bind you,” he says. “It could be energy; it could be human stupidity; it could be regulation; it could be data constraints; it could just be institutional sluggishness.” Another possibility is that even a superintelligence would run out of ideas. “ AI may resolve a problem with the fishermen, but it wouldn’t change what is in the pond,” wrote Philippe Aghion of LSE and others in a working paper in 2017.
Here is the full piece, of interest throughout.