Firewood in the American Economy: 1700 to 2010
Despite the central role of firewood in the development of the early American economy, prices for this energy fuel are absent from official government statistics and the scholarly literature. This paper presents the most comprehensive dataset of firewood prices in the United States compiled to date, encompassing over 6,000 price quotes from 1700 to 2010. Between 1700 and 2010, real firewood prices increased by between 0.2% and 0.4%, annually, and from 1800 to the Civil War, real prices increased especially rapidly, between 0.7% and 1% per year. Rising firewood prices and falling coal prices led to the transition to coal as the primary energy fuel. Between 1860 and 1890, the income elasticity for firewood switched from 0.5 to -0.5. Beginning in the last decade of the 18th century, firewood output increased from about 18% of GDP to just under 30% of GDP in the 1830s. The value of firewood fell to less than 5% of GDP by the 1880s. Prior estimates of firewood output in the 19th century significantly underestimated its value. Finally, incorporating the new estimates of firewood output into agricultural production leads to higher estimates of agricultural productivity growth prior to 1860 than previously reported in the literature.
That is from a new NBER working paper by Nicholas J. Muller.
Austin Vernon on taxes on solar (from my email)
I think your question about new taxes on solar and wind is an interesting one, and increasing taxation has been an ongoing process for years.
Some of these tax increases are normal, like ending property tax exemptions. These taxes don’t impact project economics too severely, and the breaks create a lot of ill will at the local level.
Solar has seen constant tax increases and quotas on imported panels. Uncompetitive domestic producers, other competing energy sources, anti-trade folks, and China hawks all favor these taxes. The important metric is that buying panels in the US is 2x-3x more expensive per watt than in the rest of the world.
Solar panel factories are easy to build, and technology changes quickly. There is a Dutch boy and the dam effect. We constantly have to add new tariffs on different countries and new technologies (although foreign production from US-owned companies has generally been exempt). These tariffs have to get stiffer to maintain the balance.
A recent change was that the IRA finally led everyone to start building factories in the US. An absolute avalanche of panel factories is/was on the way with less activity for cells, wafers, and polysilicon. These factories might be viable without subsidies considering US panel prices. Most of the interest groups listed don’t appreciate this outcome, especially because many are Chinese-owned factories. Foreign Entity of Concern content and ownership penalties are the obvious solution as the next hole to put a finger in because many subcomponents would still be imported and the general kludge laws like that add.
The solar installation lobby has been satisfied with tax credits that counteract some of the high panel costs. These rules tend to discourage new technology in the fine print and skew incentives. Simpler, denser solar farm designs make sense once panels are cheap. There is no reason to make the switch if panels are expensive and the tax credit is based on the total install cost. Roughly 90% of US utility-scale installations have trackers that add cost but increase per panel output. In China, there are almost no trackers. There are also some nasty effects in the residential business that encourage complex financial products over streamlining construction and permitting.
It is an interesting crossroads where the tax credits are gone, and there is now a reason to have a more direct confrontation on panel cost. The battery industry is in the early stages of a similar conflict, but it seems like they might retain the deal with the devil and keep tax credits for now.
Monday assorted links
Some European countries have mastered a happiness trick?
Using Eurobarometer data for 21 Western European countries since 1973 we show the U-shape in life satisfaction by age, present for so long, has now vanished. In 13 northern European countries – Belgium, Denmark, Finland, Germany, Iceland, Ireland, Luxembourg, the Netherlands, Norway, Sweden, Switzerland, Turkey and the UK – the U-shape has been replaced by life satisfaction rising in age. We confirm these findings with evidence from the European Social Surveys, the Global Flourishing Survey and Global Minds. Evidence of change in the U-shape is mixed for Austria and France. In six southern European countries – Cyprus, Greece, Italy, Malta, Spain and Portugal – the U-shape was replaced by life satisfaction declining in age. In these southern European countries, life satisfaction of the young has been rising since around 2015. A contributory factor is the rapid decline in youth unemployment from its 2015 peak.
Here is the full NBER paper by David G. Blanchflower and Alex Bryson.
The world’s most expensive toll?
A bridge connects Copenhagen and Malmo, and now the price is higher:
…the basic price for a one-way car journey across the bridge has been jacked up to 510 Danish kroner, or £58. For the largest vans, it is the equivalent of £218.
Research by Sydsvenskan, a regional newspaper in southern Sweden, suggests this is by far the most expensive bridge toll on the planet, costing about twice as much as its nearest rivals in Japan and Canada…
Despite the vehicle toll, the total number of people crossing the Oresund by car, train or ferry hit a record 38 million last year, equivalent to about 105,000 trips a day. A one-way railway journey between central Copenhagen and Malmo typically costs only £13.
Here is the full story from The Times. I find this intrinsically interesting, but I also would like to make a simple point. If you are assessing the optimal toll here, claims that “the higher toll limited congestion,” or “the higher toll diminished the number of car trips” are not dispositive. They are relevant information, but one also has to measure whether gains from trade across the two polities went down as well. Otherwise, you do not have much of a conclusion.
Sunday assorted links
1. What is so special about Uruguay?
2. Luis Garicano on why economic growth will not go crazy with AI. These arguments remain unanswered.
3. Ten ways to rebuild Britain.
4. How should London tax mega marshmallows?
5. Dead lawmakers have not stopped posting.
6. Progress with biological computers? (FT)
7. JSTOR now has an AI-powered reading assistant.
8. New paper on stablecoin devaluation risk.
9. Are we actually going to add a new tax on solar and wind production?
Privatize Federal Land!
I’ve long advocated selling off some federal land—an idea that reliably causes mass fainting spells among the enlightened. How could we possibly part with our national patrimony, our land, our sacred wilderness? Calm down. Most of this “public land” is never used by the public. Selling some of it would actually make it more accessible and useful to real people.
Moreover, most of you wailing about selling some Federal land are probably very happy we sold the “public” airwaves for your private cell phone use. Privatizing the airwaves made them much more useful to the public. (Thank you Reed!).
AEI has an excellent map of the lands that could be sold and developed in the Mike Lee bill. Here’s their conclusion:
The data show a significant opportunity. Our analysis finds that developing just 135-180 square miles of the most suitable BLM land, a minuscule fraction of the total, could yield approximately 1 million new homes over ten years. This would substantially address the West’s housing shortage while generating an estimated $15 billion for the U.S. Treasury from land sales.
Here’s an example of the some of the land potentially developable around Las Vegas.
Here’s a Google satellite image of the bit around Mountain’s Edge. Enjoy your fishing on these public lands!
And here’s a very crude but useful scatter plot showing the correlation between median home prices in a state and Federal land ownership. Should home prices in Utah (63.1% Federally owned) really be 71% higher than in Texas (1.8% Federally owned)? Of course, Texas is famously an urban hellscape with no parks, no open space, and nowhere to hunt or fish.
C’mon British people, you can do better than this…
I’ve seen estimates that thirty people a day are arreested in the UK for things they say on social media. Other anecdotes of varying kinds continue to pile up:
Describing a middle-aged white woman as a “Karen” is borderline unlawful, a judge has said amid a bitter row at a mental health charity.
The slang term, used increasingly since the pandemic, refers to middle-aged white women who angrily rebuke those they view as socially inferior. Sitting in an employment tribunal, a judge has now said that the term is pejorative because it implies the woman is excessively and unreasonably demanding.
The woman who used the term nonetheless was acquitted, though barely. Here is the article from Times of London. And this:
The government’s new Islamophobia definition could stop experts warning about Islamist influence in Britain, a former anti-extremism tsar has warned.
Lord Walney said that a review being carried out by Angela Rayner’s department should drop the term Islamophobia, or risk “protecting a religion from criticism” rather than protecting individuals.
Ministers launched a “working group” in February aimed at forming an official definition of what is meant by Islamophobia or anti-Muslim hatred within six months.
Here is The Times link. British people, it is not just J.D. Vance who is upset. You are embarrassing yourselves with all this! Please stop. Even enemies of free speech think you are going about this in a pretty stupid way.
Balaji on AI
A few miscellaneous thoughts.
(1) First, the new bottleneck on AI is prompting and verifying. Since AI does tasks middle-to-middle, not end-to-end. So business spend migrates towards the edges of prompting and verifying, even as AI speeds up the middle.
(2) Second, AI really means amplified intelligence, not agentic intelligence. The smarter you are, the smarter the AI is. Better writers are better prompters.
(3) Third, AI doesn’t really take your job, it allows you to do any job. Because it allows you to be a passable UX designer, a decent SFX animator, and so on. But it doesn’t necessarily mean you can do that job *well*, as a specialist is often needed for polish.
(4) Fourth, AI doesn’t take your job, it takes the job of the previous AI. For example: Midjourney took Stable Diffusion’s job. GPT-4 took GPT-3’s job. Once you have a slot in your workflow for AI image gen, AI code gen, or the like, you just allocate that spend to the latest model.
(5) Fifth, killer AI is already here — and it’s called drones. And every country is pursuing it. So it’s not the image generators and chatbots one needs to worry about.
(6) Sixth, decentralized AI is already here and it’s essentially polytheistic AI (many strong models) rather than monotheistic AI (a single all-powerful model). That means balance of power between human/AI fusions rather than a single dominant AI that will turn us all into paperclips/pillars of salt.
(7) Seventh, AI is probabilistic while crypto is deterministic. So crypto can constrain AI. For example, AI can break captchas, but it can’t fake onchain balances. And it can solve some equations, but not cryptographic equations. Thus, crypto is roughly what AI can’t do.
(8) Eighth, I think AI on the whole right now is having a decentralizing effect, because there is so much more a small team can do with the right tooling, and because so many high quality open source models are coming.
All this could change if self-prompting, self-verifying, and self-replicating AI in the physical world really gets going. But there are open research questions between here and there.
Here is the link to the tweet.
Detroit helicopter drop of cash
The money drop was apparently the last wish of the owner of a nearby car wash. Knife said the man recently died due to Alzheimer’s Disease and his funeral was Friday.
Despite the mad dash for free cash, the incident remained peaceful, if hectic, Knife said.
“There was no fighting, none of that,” she said. “It was really beautiful.”
…Witnesses said a helicopter hovering in the area of Gratiot Avenue and Conner Street dropped thousands of dollars in cash onto the pedestrians below, bringing a sudden and surreal burst of joy to a hot Friday afternoon in east Detroit.
Lisa Knife, an employee at the nearby Airport Express Lube & Service, 10490 Gratiot, estimated that thousands of dollars were tossed from the chopper.
Here is the full story, via Edward Craig.
Saturday assorted links
1. Claude buying things. And does Claude generate better research ideas? (Maybe!)
2. NYT 100 best movies of the century list.
3. Can a 78-year-old tech magnate conduct Mahler’s 2nd? (NYT)
4. How active is Child Protection Services? (link is now fixed)
6. Is morally universal language declining over time?
7. Denmark will give people IP in their own features, voices, and likenesses.
8. Lauren Groff on Mansfield Park (NYT).
The military culture that is German
Pistorius must grapple with a procurement bureaucracy that once took seven years to select a new main assault rifle and more than a decade to procure a helmet for helicopter pilots. He will have to oversee an enormous ramp-up by an arms industry already struggling with capacity. And billions must go towards tasks such as upgrading barracks, some of which are in “disastrous” shape with crumbling plaster and mould, according to the armed forces watchdog.
Here is more from the FT.
What should I ask Seamus Murphy?
Yes I will be doing a Conversation with him. An associate of his emails me this excellent description of his work:
Spent over two decades photographing in Afghanistan (12 trips between 1994–2007). Has been back since the fall of the U.S. side.
- Collaborated with P.J. Harvey on her album Let England Shake— they travelled together through Kosovo, Afghanistan, and the U.S. while she wrote songs and he filmed/photographed. This lead to P.J.’s album, and Seamus’s documentary ‘A Dog Called Money’
- Made a film on recently deceased Irish poet Pat Ingoldsby. Pat was a well known Dublin character, a former TV presenter who sold his poetry on the streets of Dublin outside Trinity college for decades.
- Published several books, including:
- A Darkness Visible: Afghanistan
- I Am the Beggar of the World (with Afghan women’s Landay poetry)
- The Hollow of the Hand (with P.J. Harvey)
- The Republic (on Ireland pre-2016 centenary)
- Won 7 work press photo awards, and has photos held in the Getty Museum and Imperial War Museum
- More recently Seamus has published Strange Love which is a photography book on visual parallels between the U.S. and Russia.
- Seamus also semi lives in India now and has photo collections on modernising/not-modernising India (https://www.seamusmurphy.com/Epic-City/2)
TC again: So what should I ask him?
p.s. Here is Murphy’s home page.
What I’ve been reading
1. Alex Niven, The North Will Rise Again: In Search of the Future in Northern Heartlands. If you can look past the usual ill-informed chatter about Maggie ruining northern England (the author needs to study growth models!), this is quite an interesting book. I do not mind that it roams into the territory of popular music in what seems to be an arbitrary fashion. Here is one bit: “I have written before about how a version of this cultural complex is one of the reasons why English identity — with its nostalgia for vague historical dreams and absurd lack of real constitutional structures in the present — is really a kind of vast melancholic illusion. Northern English identity is a sort of killer variant of this more widespread national disease.”
2. Christopher Clarey, The Warrior: Rafael Nadal and His Kingdom of Clay. An intelligent and very good book, covering one of the greatest eras (Federer-Nadal-Djokovic) that any sport ever has had.
3. Ned Palmer, A Cheesemonger’s Tour de France. About half of this book is good and focused. Think of it as one possible introduction to French regional history. You can learn why Provence is so special for goat cheese, and why Dijon has kept so many original agricultural and cheese-making traditions. Why cheese comes from Brittany only in recent times, and so on.
4. Rupert Gavin, Amorous or Loving?: The Highly Peculiar Tale of English and the English. An excellent book that will make my best of the year list. How did the English language come to be so diverse and also have so many words? Along the way you get decent insights into economic history, the importance of London, and the Straussian readings of Macbeth.
5. Tim Bouverie, Allies at War: The Politics of Defeating Hitler. A useful and detailed reminder that allies never really quite get along with each other. You can never read too many books about World War II.
I am very sympathetic with Dean Spears and Michael Geruso,
Friday assorted links
1. Yancey Strickler’s Artist Corporations project, and TED talk here.
2. Debates over the degree of heritability.
3. Matching potential partners based on browser history.
4. USG currently runs about 240 grocery stores, through the military, and operating at a loss.
5. “The risk premium on New York City’s debt barely budged following the election results.” (Bloomberg)
6. Turnover in Iranian military leadership.
9. North Carolina legislature votes to ban minimum parking requirements. More here.