2026-03-22 15:04:41
So far, however, the predictions that the mass automation of coding will leave outsourcing firms obsolete seem overblown. Their clients often hope AI will create huge productivity gains by, for example, using the technology to quickly and cheaply build a new internal HR tool. But such improvements in productivity are only possible in “greenfield” environments with “clean architecture”, argues Atul Soneja, chief operating officer at Tech Mahindra, an IT firm. Deploying AI in “brownfield” environments—with legacy code, a lack of documentation and multiple systems that must all continue to operate in real time—is far trickier. In the end, clients often realise that their AI dreams were too ambitious and end up hiring as many outsourced coders as before, say executives.
What is more, the AI boom may present an opportunity for the consultancy arms of India’s outsourcers. They argue that they can now fulfil more of a strategic role for their clients: getting the most out of AI requires understanding all of the context around the problem, something that consultants with experience across businesses can offer. Nandan Nilekani, one of the founders of Infosys, reckons that such services related to AI could be worth $300bn-400bn by 2030.
Here is more from The Economist.
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2026-03-22 12:52:02
[Robin] Brooks: So let me give you two ways of thinking about what’s going on, both of them are really about trying to think about what kind of risk premia need to be priced in oil, given all the massive uncertainty that we have. The first way that I’ve been thinking about this is—I spent a lot of time working on Ukraine and Russia and sanctions after the invasion four years ago. Russia produces about 10 million barrels of oil per day. It exports, of that, about 7 million barrels of oil per day. The Strait of Hormuz has transit of about 20 million barrels of oil per day. So the Strait of Hormuz is roughly 3 times what Russia could have been. And remember, in the days right after the invasion, markets were really worried about Russian oil being embargoed. There was a whole discussion about that. So the rise in Brent, which is the global benchmark oil price, is about 70% from two weeks before the outbreak of war in the Gulf to now. On a similar time horizon back in ‘22, it was 20%. So we have roughly a 3X in terms of the rise in oil prices. So when people come to me and say “$150 or $200 for oil prices” and we’re currently at $115, roughly, then I think, “why, what’s the rationale?”
The second perspective is on the supply shortfall that we have and using price elasticity of demand to think about: “how much does the price need to rise if demand has to do all the adjusting in the short term,” which it does. And “what kind of numbers do we come up with if we make reasonable assumptions?” So I put out a Substack note today—thank you so much for reading my Substack, I’m incredibly flattered and stressed as a result— if you assume that the Strait of Hormuz goes from 20 million barrels of oil per day to 10, it’s basically oil from the Gulf is running at half of its normal capacity, and you assume a price elasticity sort of in the middle of the range that the academic literature has, which is about 0.15, then you get that this would generate a rise in oil prices of between 60 and 70%. So again, if I think about what we’re pricing in markets now versus what basic back-of-the-envelope-calculations tell you, then I think we’re roughly in the right ballpark.
That is from his interview with Paul Krugman. Via Luis Garicano.
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2026-03-22 03:24:40
By The Diamonds. The video is not what I was expecting.
The post Little Darlin’ appeared first on Marginal REVOLUTION.
2026-03-21 23:50:12
1. Canada [Sikh] fact of the day.
2. Is the world entering a new “missile age”?
3. Karp tells the story of Habermas rejecting Karp.
4. David Botstein, RIP (NYT).
6. Seb Krier.
The post Saturday assorted links appeared first on Marginal REVOLUTION.
2026-03-21 14:46:56
In 18 parts, Lang explores some of Smith’s central themes, including one of the book’s most famous passages, where Smith uses a wool coat worn by a very poor Scottish worker as a way to examine trade. “He asks, ‘Did you ever think of how many people need to be employed in order to make that coat?’” says Lang, whose movement “the woolen coat” names all the artisans and laborers who contributed to the garment in song:
the shepherd
the sorter of the wool
the wool-comber or carder
the dyer
the spinner
the weaver
the fuller
There are also the workers on the ship that brought in the dye and all the people who built the ship. An ordinary coat is revealed to be a kind of miracle of skilled labor and global collaboration, the product of “many thousands” of workers coming together in (selfish) harmony. Part of me wanted to run out of the theater right then and buy something … perhaps a coat… for America.
Here is more from Bloomberg, via John De Palma. The opera seems to be ultimately a rather gloomy view of the book?
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2026-03-21 12:41:46
From 2014 to 2024, Canada’s real GDP per capita adjusted for purchasing power parity grew by just 3.2 percent in total, an anemic 0.4 percent per year on average, and the third lowest among 38 advanced nations. Over the same period, the United States posted 20.2 percent total growth (1.9 percent annually), and the OECD average reached 15.3 percent (1.4 percent annually). The measurement shortcomings cannot explain five-to six-fold differences in growth rates.
And:
The analysis estimates that a substantial share of Canadians who would rank among top earners in Canada have emigrated to the United States—roughly 40 percent of potential top 1 percent earners and 30 to 50 percent of the next nine percentiles. Canadian-born individuals in the United States are more educated than native-born Americans, earn substantially more, and cluster disproportionately in top income deciles.
Canada is effectively exporting its inequality to the U.S. The brain drain simultaneously lowers our average income while raising American income, accounting for a significant share of the persistent GDP gap.
Here is the full piece.
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