New issue of Econ Journal Watch
The End of Truth: In 1944, Friedrich Hayek warned that traveling down the anti-liberal road would lead us into serfdom under rogue government. One chapter, “The End of Truth,” explained the kit necessary to sustain the new feudalism, the kit of propaganda and clientelism promoting big lies that must be protected by censorship, intimidation, and persecution. Republished by permission.
Isaiah Berlin on Karl Marx: An earlier exchange (1, 2, 3, 4) touched upon whether Karl Marx’s having become a big deal was adventitious or destined. Two selections from Isaiah Berlin are here republished, by permission, to suggest that it was rather destined: (1) a selection from Berlin’s book Karl Marx; (2) “Marxism and the International in the Nineteenth Century”. Daniel Klein provides a Foreword.
Housing supply liberalization and recent research: Jason Sorens examines three recent papers that might lend support to opponents of liberalization. One paper finds that housing supply has no long-run effect on local rents, while two others find that restricting housing supply might translate into amenities. Sorens argues that the evidence so far still supports the conclusion that supply-side zoning liberalization typically lowers local rents over meaningful time horizons without generating disamenities substantial enough to overcome the welfare benefits of liberalization. Greg Howard and Jack Liebersohn, the authors of one of the commented-on papers, reply to Sorens.
Bubble Talk: An American Economic Review article by Jianjun Miao and Pengfei Wang purports to “provide a theory of rational stock price bubbles.” In the previous issue, Tomohiro Hirano and Alexis Akira Toda argued that Miao and Wang’s ‘bubble’ talk is inapt. Now, Miao and Wang reply, and Hirano and Toda rejoin.
Incorporation and productivity in Russia 1894–1908: A 2020 American Economic Review article by Amanda Gregg compares factory productivity among corporations and non-corporations in late Imperial Russia, and finds that corporations outperformed. Here, Nikita Lychakov scrutinize Gregg’s data and methods and suggests that the claimed causal relationship between the corporate form and productivity remains unestablished. Amand Gregg replies.
Online grocery shopping in Russia: In a 2024 article in Sustainability, Michael Olumekor, Harman Preet Singh, and Ibrahim Abdullah Alhamad explore factors driving the regional uptake of online grocery shopping in Russia. Here, Muzaffarjon Ahunov and Leo Van Hove suggest that their analysis has multiple serious weaknesses and that their results should be disregarded. Ahunov and Van Hove show, for example, that internet access does play a critical role.
The Impartial Spectator Rises: Daniel Klein, Nicholas Swanson, and Jeffrey Young (KSY) comment on twelve scholars: T.D. Campbell, Samuel Fleischacker, Fonna Forman-Barzilai, Gilbert Harman, Gavin Kennedy, A.L. Macfie, James Otteson, Maria Pia Paganelli, D.D. Raphael, Eric Schliesser, Craig Smith, and Jack Russell Weinstein. KSY allege that they misunderstand “impartial spectator” in Adam Smith’s The Theory of Moral Sentiments—specifically, that they flatten significations of “impartial spectator.” KSY explain a paragraph in which Smith distinguishes “the man within the breast” and “impartial spectator”— a paragraph elided by most of the commented-on authors. Those authors are hereby invited to respond for publication in the next issue (March 2026) of this Journal.
EJW Audio:
Jason Sorens on Housing Supply Liberalization and Recent Research
*Two Paths to Prosperity: Culture and Institutions in Europe and China, 1000–2000*
By Avner Greif, Joel Mokyr, and Guido Tabellini. Due out in November, likely to be excellent.
Sunday assorted links
1. Toby Ord on infinities in ethics.
2. Malicious-Looking URL Creation Service.
3. Multiple talent agents are trying to sign thisn AI actress.
4. Will Russian oil output be declining? (WSJ)
5. Some Microsoft bonds now offer a slightly lower yield than comparable Treasuries (WSJ).
6. Forthcoming Robin Holloway book on the history and nature of classical music, UK publication only.
7. Review of One Battle After Another. Exactly which “best movie” awards should it win?
Zambia fact of the day
It is worse than you think:
Of 360,000 children aged 15 in Zambia only five (not 5%, 5 total) could read at “globally proficient levels.”
Chinese rap music, by SKAI ISYOURGOD
Is fourteen million views a lot or a little?
Here is further information on the creator, including this article from The Economist.
*Being Thomas Jefferson: An Intimate History*
That is the forthcoming book by Andrew Burstein, who is also author of the excellent Madison and Jefferson (with Nancy Isenberg). I am sent many books on the founding and Founding Fathers, and while I find their average quality to be high, usually they do not grab my attention. I have already read plenty in that area. I also have consumed many books on Jefferson in particular,s Dumas Malone boring or magisterial? But this one I read straight through, as it is simply…compelling. Excerpt:
Three thousand copies of Esquisse were issued in 1795, nine years before the publication of Condorcet’s Collected Writings in twenty-one volumes [TC: when is the AI-assisted translation coming?]. As a systematic compendium of the philosophe’s outlook on all matters of human intervention and the “perfectability” of the species, the book advances through the stages of social development from early times in order to address the need for liberation of the progressive spirit through all available means of encouragement. He applaus every perceptible advance toward closing the economic gap between the wealthy and everyone else, as well as equality under the law, rights of conscience, decolonization, and universal suffrage. It is difficult to find another Enlightenment figure who went as far as Condorcet in envisioning a just society.
And:
President Thomas Jefferson, self-styled champion of republican methods, was putting his finger on the scale here. It is hard to pretend otherwise. With an unwarranted exercise of power aimed at weakening the Supreme Court, he was acting from a private need to humiliate a man who treated a nonelective position as a partisan platform. While the emotion is quite understandable, Jefferson’s justice was purely retributive.
Recommended, you can pre-order here.
Saturday assorted links
2. How much would mothers earn if they did not have children?
3. Mick West is still out to lunch. The drones are from Russia duh, noting that there are usually imagined sightings as well. Oddly, his problem is not downgrading what “the kooks” have to say (they are indeed kooks), but simply refusing to recognize inside information that is held and openly admitted by respectable elites.
Innovation and the Great Divergence
Abstract: Recent developments in historical national accounting suggest that the timing of the Great Divergence hinges on the different trends in northwest Europe and the Yangzi Delta region of China. The positive trend of GDP per capita in northwest Europe after 1700 was a continuation of a process that began in the fourteenth century, while the negative trend in the Yangzi Delta continued a pattern of alternating periods of growing and shrinking, but reaching a new lower level. These GDP per capita trends were driven by different paths of innovation. TFP growth was strongly positive in Britain after the Black Death, in the Netherlands during the sixteenth century and again in Britain from the mid-seventeenth century. Although TFP growth was positive in China during the Northern Song dynasty, it was predominantly negative during the Ming and Qing dynasties, in the Yangzi Delta as well as in China as a whole.
By Stephen Broadberry and Runzhuo Zhai, via the excellent Samir Varma.
*One Battle After Another*
That is the new Paul Thomas Anderson movie, inspired by Pynchon’s Vineland. I do not usually like Anderson’s films (apart from Magnolia), but this so far is the best movie of the year? It takes the “Days of Rage” themes and connects them to our current predicament, weaving them into a unified whole, where the world has some characteristics of the 1970s and some of today. Some scenes are flawed, but overall the cast, soundtrack, and cinematography are the best I have seen in some while. We are doing cinema again, or at least he is. Recommended, noting that it can be dispiriting and difficult to watch. Here is the Yglesias review.
Markets in everything
A new app offering to record your phone calls and pay you for the audio so it can sell the data to AI companies is, unbelievably, the No. 2 app in Apple’s U.S. App Store’s Social Networking section.
The app, Neon Mobile, pitches itself as a moneymaking tool offering “hundreds or even thousands of dollars per year” for access to your audio conversations.
Neon’s website says the company pays 30¢ per minute when you call other Neon users and up to $30 per day maximum for making calls to anyone else. The app also pays for referrals. The app first ranked No. 476 in the Social Networking category of the U.S. App Store on September 18 but jumped to No. 10 at the end of yesterday, according to data from app intelligence firm Appfigures.
On Wednesday, Neon was spotted in the No. 2 position on the iPhone’s top free charts for social apps…
However, Neon’s marketing claims to only record your side of the call unless it’s with another Neon user.
Here is the full story, via Mark.
Friday assorted links
1. Five reforms for science funding.
2. Canon of art works about Washington, D.C. They forgot to list “No Way Out,” one of the best DC movies, with Gene Hackman.
3. Private equity in the hospital industry.
5. The Economist on talent and spotting geniuses.
6. How common is accidental invention?
7. Evaluating LLMs on real world tasks.
Mick West, by the way, initially was dismissing “drones over Denmark” reports, he is not a reliable source rather a reflexive nay-sayer.
Lerner Symmetry Bites
President Trump recently boasted:
.@POTUS: “We’re going to take some of that tariff money that we made — we’re going to give it to our farmers… We’re going to make sure that our farmers are in great shape.”
A practically textbook example of Lerner Symmetry! In an earlier post, I highlighted Doug Irwin’s Three Simple Principles of Trade Policy. Principle One is Lerner Symmetry—a tax on imports is a tax on exports:
Exports are necessary to generate the earnings to pay for imports, or exports are the goods a country must give up in order to acquire imports….if foreign countries are blocked in their ability to sell their goods in the United States, for example, they will be unable to earn the dollars they need to purchase U.S. goods.
…The equivalence of export and import taxes is not an obvious proposition, and it is often counterintuitive to most people. Imagine taking a poll of average Americans and asking the following question: “Should the United States impose import tariffs on foreign textiles to prevent low-wage countries
from harming thousands of American textile workers?” Some fraction, perhaps even a sizeable one, of the respondents would surely answer affirmatively. If asked to explain their position, they would probably reply that import tariffs would create jobs for Americans at the expense of foreign workers and thereby reduce domestic unemployment.Suppose you then asked those same people the following question: “Should the United States tax the exportation of Boeing aircraft, wheat and corn, computers and computer software, and other domestically produced goods?” I suspect the answer would be a resounding and unanimous “No!” After all, it would be explained, export taxes would destroy jobs and harm important industries. And yet the Lerner symmetry theorem says that the two policies are equivalent in their economic effects.
Thus, President Trump is having to subsidize farmers because farmers are exporters. Import tariffs make it harder for exporters to sell abroad. Using tariff revenue to subsidize the losses of exporters is a textbook illustration of Lerner Symmetry because the export losses flow directly from the tax on imports! The irony is that President Trump parades the subsidies as a victory while in fact they are simply damage control for a policy he created.
Why is Milei begging for a bailout?
There are two primary reasons.
First, he pegged Argentina’s real exchange rate too high, hoping this would appease voters by getting inflation down more quickly. That was a miscalculation. It also was a violation of market or libertarian principles. The problems here are not an instance of market failure, rather Milei forgot his own principles.
Second, the opposition did very well in a recent election. So everyone is afraid the reign of Milei, or like-minded leaders, is not going to last for so long. That precipitated a crisis in the markets. But that is hardly an argument against Milei, even though it happened on his watch. It is an argument against the likely alternatives to Milei.
So it is a mistake to read recent events as somehow a repudiation of market or libertarian principles.
My excellent Conversation with Steven Pinker
Here is the audio, video, and transcript. Here is part of the episode summary:
Tyler and Steven probe these dimensions of common knowledge—Schelling points, differential knowledge, benign hypocrisies like a whisky bottle in a paper bag—before testing whether rational people can actually agree (spoiler: they can’t converge on Hitchcock rankings despite Aumann’s theorem), whether liberal enlightenment will reignite and why, what stirring liberal thinkers exist under the age 55, why only a quarter of Harvard students deserve A’s, how large language models implicitly use linguistic insights while ignoring linguistic theory, his favorite track on Rubber Soul, what he’ll do next, and more.
Excerpt:
COWEN: Surely there’s a difference between coordination and common knowledge. I think of common knowledge as an extremely recursive model that typically has an infinite number of loops. Most of the coordination that goes on in the real world is not like that. If I approach a traffic circle in Northern Virginia, I look at the other person, we trade glances. There’s a slight amount of recursion, but I doubt if it’s ever three loops. Maybe it’s one or two.
We also have to slow down our speeds precisely because there are not an infinite number of loops. We coordinate. What percentage of the coordination in the real world is like the traffic circle example or other examples, and what percentage of it is due to actual common knowledge?
PINKER: Common knowledge, in the technical sense, does involve this infinite number of arbitrarily embedded beliefs about beliefs about beliefs. Thank you for introducing the title with the three dots, dot, dot, dot, because that’s what signals that common knowledge is not just when everyone knows that everyone knows, but when everyone knows that everyone knows that and so on. The answer to your puzzle — and I devote a chapter in the book to what common knowledge — could actually consist of, and I’m a psychologist, I’m not an economist, a mathematician, a game theorist, so foremost in my mind is what’s going on in someone’s head when they have common knowledge.
You’re right. We couldn’t think through an infinite number of “I know that he knows” thoughts, and our mind starts to spin when we do three or four. Instead, common knowledge can be generated by something that is self-evident, that is conspicuous, that’s salient, that you can witness at the same time that you witness other people witnessing it and witnessing you witnessing it. That can grant common knowledge in a stroke. Now, it’s implicit common knowledge.
One way of putting it is you have reason to believe that he knows that I know that he knows that I know that he knows, et cetera, even if you don’t literally believe it in the sense that that thought is consciously running through your mind. I think there’s a lot of interplay in human life between this recursive mentalizing, that is, thinking about other people thinking about other people, and the intuitive sense that something is out there, and therefore people do know that other people know it, even if you don’t have to consciously work that through.
You gave the example of norms and laws, like who yields at an intersection. The eye contact, though, is crucial because I suggest that eye contact is an instant common knowledge generator. You’re looking at the part of the person looking at the part of you, looking at the part of them. You’ve got instant granting of common knowledge by the mere fact of making eye contact, which is why it’s so potent in human interaction and often in other species as well, where eye contact can be a potent signal.
There are even species that can coordinate without literally having common knowledge. I give the example of the lowly coral, which presumably not only has no beliefs, but doesn’t even have a brain with which to have beliefs. Coral have a coordination problem. They’re stuck to the ocean floor. Their sperm have to meet another coral’s eggs and vice versa. They can’t spew eggs and sperm into the water 24/7. It would just be too metabolically expensive. What they do is they coordinate on the full moon.
On the full moon or, depending on the species, a fixed number of days after the full moon, that’s the day where they all release their gametes into the water, which can then find each other. Of course, they don’t have common knowledge in knowing that the other will know. It’s implicit in the logic of their solution to a coordination problem, namely, the public signal of the full moon, which, over evolutionary time, it’s guaranteed that each of them can sense it at the same time.
Indeed, in the case of humans, we might do things that are like coral. That is, there’s some signal that just leads us to coordinate without thinking it through. The thing about humans is that because we do have or can have recursive mentalizing, it’s not just one signal, one response, full moon, shoot your wad. There’s no limit to the number of things that we can coordinate creatively in evolutionarily novel ways by setting up new conventions that allow us to coordinate.
COWEN: I’m not doubting that we coordinate. My worry is that common knowledge models have too many knife-edge properties. Whether or not there are timing frictions, whether or not there are differential interpretations of what’s going on, whether or not there’s an infinite number of messages or just an arbitrarily large number of messages, all those can matter a lot in the model. Yet actual coordination isn’t that fragile. Isn’t the common knowledge model a bad way to figure out how coordination comes about?
And this part might please Scott Sumner:
COWEN: I don’t like most ballet, but I admit I ought to. I just don’t have the time to learn enough to appreciate it. Take Alfred Hitchcock. I would say North by Northwest, while a fine film, is really considerably below Rear Window and Vertigo. Will you agree with me on that?
PINKER: I don’t agree with you on that.
COWEN: Or you think I’m not your epistemic peer on Hitchcock films?
PINKER: Your preferences are presumably different from beliefs.
COWEN: No. Quality relative to constructed standards of the canon…
COWEN: You’re going to budge now, and you’re going to agree that I’m right. We’re not doing too well on this Aumann thing, are we?
PINKER: We aren’t.
COWEN: Because I’m going to insist North by Northwest, again, while a very good movie is clearly below the other two.
PINKER: You’re going to insist, yes.
COWEN: I’m going to insist, and I thought that you might not agree with this, but I’m still convinced that if we had enough time, I could convince you. Hearing that from me, you should accede to the judgment.
I was very pleased to have read Steven’s new book
Pulse
Today we are launching my favorite feature of ChatGPT so far, called Pulse. It is initially available to Pro subscribers.
Pulse works for you overnight, and keeps thinking about your interests, your connected data, your recent chats, and more. Every morning, you get a custom-generated set of stuff you might be interested in. It performs super well if you tell ChatGPT more about what’s important to you.
In regular chat, you could mention “I’d like to go visit Bora Bora someday” or “My kid is 6 months old and I’m interested in developmental milestones” and in the future you might get useful updates.
Think of treating ChatGPT like a super-competent personal assistant: sometimes you ask for things you need in the moment, but if you share general preferences, it will do a good job for you proactively.
This also points to what I believe is the future of ChatGPT: a shift from being all reactive to being significantly proactive, and extremely personalized.
That is from Sam Altman.