2026-02-06 04:06:17
From greenbacks stuffed into children’s teddy bears to fortunes tucked away in the ceiling, Argentines have more than $250 billion in dollars stashed at home, along with offshore accounts and safe-deposit boxes—some six times the reserves of the central bank.
But two years into Milei’s government, Argentines are easing their grip on their precious dollars.
Dollars held in the country’s banks by private-sector investors hit a record at the end of last year of nearly $37 billion, up 160% since Milei took office in December 2023, according to central-bank data.
Here is more from the WSJ.
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2026-02-06 02:39:21
Self-recommending, here goes.
The post Hanno Lustig and Romain Wacziarg now have a Substack appeared first on Marginal REVOLUTION.
2026-02-06 01:02:40
1. Beijing enlists AI to bring traditional Chinese medicine into the future.
2. ChinaTalk podcast with Ed Luttwak.
3. Hidden Car Door Handles Are Officially Being Banned in China.
4. China’s disappearing generals (NYT).
5. China uses this map in (some of?) its schools.
6. Zvi on Kimi 2.5.
The post Thursday assorted China links appeared first on Marginal REVOLUTION.
2026-02-05 20:19:19
Pharmaceuticals have high fixed costs of R&D and low marginal costs. The first pill costs a billion dollars; the second costs 50 cents. That cost structure makes price discrimination—charging different customers different prices based on willingness to pay—common.
Price discrimination is why poorer countries get lower prices. Not because firms are charitable, but because a high price means poorer countries buy nothing, while any price above marginal cost is still profit. This type of price discrimination is good for poorer countries, good for pharma, and (indirectly) good for the United States: more profits mean more R&D and, over time, more drugs.
The political problem, however, is that Americans look abroad, see lower prices for branded drugs, and conclude that they’re being ripped off. Riding that grievance, Trump has demanded that U.S. prices be no higher than the lowest level paid in other developed countries.
One immediate effect is to help pharma in negotiations abroad: they can now credibly say, “We can’t sell to you at that discount, because you’ll export your price back into the U.S.” But two big issues follow.
First, this won’t lower U.S. prices on current drugs. Firms are already profit-maximizing in the U.S. If they manage to raise prices in France, they don’t then announce, “Great news—now we’ll charge less in America.” The potential upside of the Trump plan isn’t lower prices but higher pharma profits, which strengthens incentives to invest in R&D. If profits rise, we may get more drugs in the long run. But try telling the American voter that higher pharma profits are good.
The second issue is that the plan can backfire.
In our textbook, Modern Principles, Tyler and I discuss almost exactly this scenario: suppose policy effectively forces a single price across countries. Which price do firms choose—the low one abroad or the high one in the U.S.? Since a large share of profits comes from the U.S., they’re likely to choose the high price:
Pfizer CEO Albert Bourla was even more direct, saying it is time for countries such as France to pay more or go without new drugs. If forced to choose between reducing U.S. prices to France’s level or stopping supply to France, Pfizer would choose the latter, Bourla told reporters at a pharma-industry conference.
So the real question is: will other countries pay?
If France tried to force Americans to pay more to subsidize French price controls, U.S. voters would explode. Yet that’s essentially what other countries are being told but in reverse: “You must pay more so Americans can pay less.” Other countries are already stingier than the U.S., and they already bear costs for it—new drugs arrive more slowly abroad than here. Some governments may decide—foolishly, but understandably—that paying U.S.-level prices is politically impossible. If so, they won’t “harmonize upward.” They’ll follow the European way: ration, delay and go without.
In that case, nobody wins. Pharma profits fall, R&D declines, U.S. prices don’t magically drop, and patients abroad get fewer new drugs and worse care. Lose-lose-lose.
We don’t know the equilibrium, but lose-lose-lose is entirely plausible. Switzerland, for example, does not seem willing to pay more:
Yet Switzerland has shown little political willingness to pay more—threatening both the availability of medications in the country and its role as a global leader in developing therapies. Drug prices are the primary driver of the increasing cost of mandatory health coverage, and the topic generates heated debate during the annual reappraisal of insurance rates. “The Swiss cannot and must not pay for price reductions in the USA with their health insurance premiums,” says Elisabeth Baume-Schneider, Switzerland’s home affairs minister.
If many countries respond like Switzerland—and Trump’s unpopularity abroad doesn’t help—the sector ends up less profitable and innovation slows. Voters may feel less “ripped off,” but they’ll be buying that feeling with fewer drugs and sicker bodies.
The post Trump’s Pharmaceutical Plan appeared first on Marginal REVOLUTION.
2026-02-05 20:16:07
AIs can now rent human labor.
The post Plug me back in! appeared first on Marginal REVOLUTION.
2026-02-05 14:08:53
This was great fun for me, here is the audio, video, and transcript. Here is part of the episode summary:
Tyler and Andrew debate whether those 1929 stock prices were justified, what Fed and policy choices might have prevented the Depression, whether Glass-Steagall was built on a flawed premises, what surprised Andrew most about the 1920s beyond the crash itself, how business leaders then would compare to today’s CEOs, whether US banks should consolidate, how Andrew would reform US banking regulation, what to make of narrow banking proposals and stablecoins, whether retail investors should get access to private equity and venture capital, why sports gambling and new financial regulations won’t make us much safer, how Andrew broke into the New York Times at age 18, how he manages his information diet, what he learned co-creating Billions, what he plans on learning about next, and more.
Excerpt:
COWEN: I have a few general questions about the 1920s. Obviously, you did an enormous amount of work for this book. Putting aside the great crash and the focus of your book, what is it you learned about the 1920s more generally that most surprised you? Because you learn all this collateral information when you write a book like this, right?
SORKIN: So many things. The book turned into a bit of a love letter to New York in terms of the architecture of New York. I don’t think I appreciated just how many buildings went up in New York and how they were constructed and what happened. That fascinated me. I think the story of John Raskob, actually, who was, to me, the Elon Musk of his time, somebody who ran General Motors, became a super influential investor. He was a philosopher king that everybody listened to at every given moment.
He ultimately constructs the Empire State Building, which was probably the equivalent of SpaceX at that time. He had written a paper about creating a five-day workweek back in 1929, November, as all of this is happening. Not because he wanted people to work less and be nice to them, but because he thought there was an economic argument that if people didn’t have to work on Saturdays, more people would buy cars and gardening equipment, and do all sorts of things on the weekends, and buy different outfits and clothing. There were so many little things.
Then, I would argue, actually, his role in taking his fortune — he got involved in politics. He was a Republican turned Democrat. He spent an extraordinary amount of money to secretly try to undermine the reputation of Hoover. I would say to you, today, I actually think that part of the reason that Hoover’s reputation is so dim, even today, is a result of this very influential, wealthy individual in America who spent two years paying off journalists and running this secret campaign to do such a thing. You go back and really read the press and try to understand why some of these views were espoused.
By the way, this was before the crash. He started this campaign effectively in May of 1929, just three months after Hoover took office.
COWEN: It’s striking to me how forgotten Raskob is today. There’s a lesson in there about people who think they’re doing something today that will be remembered in a hundred years’ time. It probably won’t be, even if you’re a big, big deal.
SORKIN: It’s remarkable. He was a very big deal. He famously used to tell everybody, “Everybody ought to be rich.” He was trying to develop, back then, what would have been something akin to one of the first mutual funds, levered mutual funds, in fact, because he also wanted to democratize finance.
COWEN: Let’s say you’re back in New York. It’s the 1920s; you’re you. Other than walking around and looking at buildings, what else would you do back then? I would go to jazz concerts. What would you do?
SORKIN: Oh my goodness. You know what I would do? But I’m a journalista, so you’ll appreciate this.
COWEN: Yes.
SORKIN: I would have been obsessed with magazines. This was really the first real era of magazines and newspapers and the transmission of media, the sort of mass media in this way. I would have been fascinated by radio. I think those things, for me, would have been super exciting.
The truth is, I imagine I would have gotten caught up in the pastime of stock trading. It is true that all these brokerage houses are just emerging everywhere, and people are going to play them as if it’s a pastime. I always wonder whether prohibition played a role in why so many people were speculating because instead of drinking, what did they do? They traded.
Some of the time he spent interviewing me…
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