*The Price of Victory*
The author is N.A.M. Rodger, and the subtitle is A Naval History of Britain, 1815-1945. An excellent book, volume three in a longer series. Here is one excerpt:
…the most significant of all material innovations of the nineteenth century was virtually invisible. It took twenty-five years of investment and some heavy losses, but the completion of the first reliable transatlantic telegraph cable in 1866 may be taken to mark the moment when intercontinental communication times fell instantaneously from months to hours. Contemporaries talked enthusiastically of the ‘practical annihilation of time and space,’ and for an imperial and naval power with more time and space to handle than anyone else, the submarine cable was truly revolutionary. This different and expensive technology offered secure communications almost invulnerable to interference (except in shallow water). Britain possessed most of the world’s capacity to manufacture underwater cables, had an effective monopoly of Gutta percha, the only good insulator, trained the majority of the world’s cable operators, owned (in 1904) more than twice as many cable-laying ships as the rest of the world put together, and alone had mastered the difficult art of recovering and repairing cables in deep water. The high fixed costs, advanced technology and very long life (seventy-five years on average) of undersea cables made it extremely difficult for foreigners to break into this monopoly.
I will be buying and reading other books by this author, as this is one of the very best books of this year.
My first students
To continue with some biography…
My first full-time teaching job was at UC Irvine in 1988, a school with very good undergraduate students, including in economics. I was fortunate enough to be assigned Honors Intermediate Micro for my very first class.
(My general view is that the second time I teach a given class is the best, but the very first time is the second best version of the class. After that, unless I have a break of years, some of the material starts to feel too familiar to me, and I explain it less well and with less enthusiasm.)
I used the Nicholson text, as it had been pre-assigned, but I wished it had more economic intuition.
In any case I had seventeen students, and sixteen of them were Asian or Asian-American. None of them were south Asian. That was UC Irvine in those days (and perhaps still now?).
All but perhaps one were very good students.
That first year in my first class I was lucky enough to teach Stephen Jen. Stephen, as you may know, later received a PhD from MIT, working with Paul Krugman. He is these days a famous and highly respected currency analyst (among other things), and you will see his name often in the Financial Times. He lives in London, and he and I had dinner but a few weeks ago.
Stephen at first was going to do electrical engineering, but it turned out economics was his true love. I encouraged him to apply to graduate school, and wrote a very positive letter for him to MIT. The rest is history, as they say.
I spent a good bit of time with Stephen outside of class, and even played basketball with him several times. The summer of 1988 I also stayed with his family in Taipei, during a long Asia trip that I will write about some other time.
Most recently, Stephen has been known for having an early and very good call that the USD is going to decline, as indeed it did.
My second year at UC Irvine I taught the same class again. I was lucky enough to have Jeffrey Ely in my class, and of course he did very well. Jeff ended up studying for an economics PhD at UC Berkeley.
These days Jeff is a very well-known game theorist at Northwestern, arguably the number one school for game theory. He took a more traditional academic path, whereas Stephen started at the IMF and then worked his way up through the world of finance.
Jeff for a while even had a presence in the blogosphere, and still you will find him on Twitter, though he has not posted in the last year. In game theory, Jeff is highly creative and he approaches all problems by thinking like an economist.
As a person, he was always a bit more “hippie” than was Stephen, and I recall him giving me a tape of the Bob Dylan song “Million Dollar Bash,” from The Basement Tapes.
At George Mason, my best undergraduates often have been Chinese, but in terms of professional impact those are my two most successful undergraduate students ever. Getting to know and teach them was one of the very best things about being at UC Irvine. My colleagues were great too, but that is the subject of another post.
Not many links for the next two days or so
I am for a short while separated from my laptop, and I find links harder and slower to do through other means. So for a brief while not many links here.
Links will resume in due time, in the meantime enjoy the plain text, etc.
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.